In assessing investment organizations, it is often fruitful to ask, “Where are Woodward and Bernstein?”

Famous for their dogged reporting that helped unseat a president, Bob Woodward and Carl Bernstein are the prototypes that would-be investigative journalists try to imitate, even if many think of them as Redford and Hoffman.  With movies based on historical events, as with All the President’s Men, you never know how accurate the representation is,New York Times | For example, Deep Throat’s famous suggestion to “follow the money,” one of the most memorable lines in the film, apparently was dramatic license rather than an actual quote. although for our purposes it doesn’t matter.  What we are looking for is whether a firm has people actively playing the roles.

In most shops, the answer is that each analyst or portfolio manager is responsible for ferreting out the pieces of information that they need to make the decisions for which they are responsible.  Yet, in many cases those people aren’t particularly good at doing so — their strengths lie in other aspects of the job.  You might ask, “How hard can it be to ask tough questions and follow the trail where it leads you?”  It depends on the time you have available, the other things tugging at your attention, and your ability to snoop around, follow hunches, ask and re-ask questions, get doors slammed in your face, and work sources old and new from every angle.  Many investment professionals don’t have the time to do that and many don’t have the skills or inclination to be successful even when they have the time.

It is the exceptional investment organization that has a more innovative structure, where investigative specialists are used to dig deep to find the differentiated information that can add real value to the decision-making process.  They don’t need to be “investment people” and it may be better if they are not, so that they focus on producing facts rather than opinions.  A side benefit is that journalism majors are cheaper than finance majors,You might throw library science grads and others with research and information skill sets into the same category.  All are worth considering from a cost/benefit standpoint. and given the decline in the newspaper industry there are plenty of experienced hands available at reasonable prices.

It is not a natural inclination for the leaders of investment firms to consider adding positions that are out of the mainstream, especially during a period marked by retrenchment across the industry.  But if now is not the time to do things differently, such a time is not likely to ever come.  You might not break the story of the century, but you might discover information that sets your performance apart from those who don’t try.