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Many people see inefficiency as something to avoid. But WorldQuant University instructor Maurizio Tiso, PhD, sees opportunity. He built a Wall Street career by digging for hard-to-find information, often spending many tedious hours tracking down leads.

“I love inefficiency,” he said during a recent interview in New York’s Financial District. “If the markets were perfectly efficient, there is nothing for me, for you, for anybody to do. I mean, we just go with the flow.”

Tiso provided one example from early in his career. He was managing a fund that had acquired a large position in a company that relied heavily on U.S. Postal Service business. The government contract was up for renewal, creating a high-stakes scenario. Company stock would either plummet or climb, depending on the outcome. Tiso had to decide: Hold his fund's position or sell?

Portfolio managers today use natural language processing (NLP) to streamline the job of analyzing massive amounts of unstructured text and audio data to glean insights in situations like this. But NLP technology did not yet exist.

Tiso was on his own. He responded by visiting investor forums and listening to chatter that was mostly irrelevant. The process was inefficient but paid off for Tiso, who started picking up on pessimistic assessments from company insiders. Some employees were polishing their resumes and saying their farewells to colleagues.

“If employees are starting to talk to each other like this, I don’t want to be involved in this name anymore,” Tiso said. “So, I went to see my boss and told him the story and said: ‘Get out. Run.’”

Tiso’s boss heeded the advice, which paid off two days later when the company announced the loss of its Postal Service contract. As expected, the stock's value dropped by about 50 percent.

“I couldn’t do it through natural language processing,” Tiso said. “But despite the inefficiency, I just wasted my time to go to all possible forums that I could think of. And I managed to find the information I needed.”

Tiso embraces advancing technology, which has streamlined portfolio management in recent decades. But the underlying principle remains the same. Tiso tells his students in the Master of Science in Financial Engineering program at WorldQuant University to go where other people do not. Some paths might lead to dead ends, but successful fund managers keep trying. If they hang back with the crowd, they will never gain a competitive edge.