“It is easier to stand alone, if you know something that others do not or have a unique skill that gives you a leg up on the competition. The hedge fund story is revealing. Note that the herding behavior has increased as the hedge fund business has grown and collective performance has suffered. Much as we like to attribute superior skills to hedge fund managers, the herding behavior suggests that the average hedge fund manager has no competitive edge to speak off and seems to know it.” 

That is, most hedge fund managers are not contrarian value investors but instead are asset gatherers like most in the mutual fund and brokerage industries. Hence they seek to avoid “diverse performance” as Peter Lynch liked to say.

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