Strategic Wolfe

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New York – Wolfe Research LLC scored a major coup yesterday, hiring former Bear Stearns colleague François Trahan, one of the top-ranked strategists on the Street.  Ed Wolfe has been looking for ways to diversify his boutique, and the addition of Trahan marks a major milestone for the firm.

Trahan resigned last Tuesday as chief investment strategist of ISI Group Inc, where he was an Executive Managing Director and head of ISI’s Quantitative Research Team.  Presumably discussions with Ed Wolfe were well advanced, culminating in an announcement yesterday that Trahan would partner with Wolfe, becoming the firm’s Vice Chairman and Chief Investment Strategist.

Wolfe Research was formed in March 2008, as Bear Stearns’ once prestigious research department was being absorbed by JP Morgan Chase.  As a top ranked analyst, Wolfe brought a loyal client base to his new firm, and has reportedly done well despite the financial crisis.  The firm now claims ‘approximately’ 20 employees.  Nevertheless, Wolfe’s sector, transportation, is notoriously cyclical and client enthusiasm for his research waxes and wanes with the fortunes of the sector.

The addition of investment strategy greatly expands the appeal of Wolfe Research, and will create more income stability.  François Trahan, however, is not just any strategist.  Institutional Investor magazine ranked him top portfolio strategist for the past two years and for four of the past five.  Last year he also ranked third in the quantitative research category.

Trahan’s departure from ISI Group, a powerhouse firm particularly for strategists, is not unprecedented.  In 2006, Trahan’s predecessor as ISI’s Chief Investment Strategist, Jason Trennert, left with a few others to form Strategas Research Partners LLC.  For ISI defectors, the issue is not pay but ownership.  Salaries are competitive at ISI, but ownership in the firm is tightly controlled by founder Ed Hyman and a few others.

Bear Stearns’ entrepreneurial culture has spawned a number of alternative research firms.   Bear alumni include retail analyst Dana Telsey, who now runs equity research and consulting group Telsey Advisory Group, and former chief economist David Malpass, who formed Encima Global, an economic research and consulting group.  Primary Insight, an expert network now owned by the founders of Vista Research, was incubated at Bear.

Trahan himself is no stranger to independent research, having gotten his start at BCA Research in his native Quebec, and at Ned Davis Research. Now he has come full circle, and, with Wolfe, he is a partner and can benefit directly as the independent firm grows and diversifies.

The press release follows:

NEW YORK, Feb. 8 /PRNewswire/ — Wolfe Research LLC, a premier investment research boutique, announced today that Francois Trahan – ranked top Wall Street investment strategist by Institutional Investor magazine — has joined the firm as Vice Chairman and Chief Investment Strategist.  Wolfe Research, founded in 2008 by former Bear Stearns & Co., Inc. senior analyst Ed Wolfe, has established a reputation for superior transportation research.

Commenting on the hire, Mr. Wolfe said, “Having known Francois for a long time, I am well aware of the expertise, intellect and forthrightness he brings to his research. I am not alone in regarding him as the Street’s best strategist and quant analyst. His insight into the drivers and dynamics of markets is remarkable.  For instance, his bearish call on housing prior to the subprime crash, as well as his push into equities before the market run-up in 2009, were spot on.  Moreover, he made me a better analyst while we were colleagues at Bear Stearns.  I am delighted that he is joining the firm and welcome him as a partner.”

Mr. Trahan was formerly an Executive Managing Director and Chief Investment Strategist at International Strategy and Investment Group (ISI), as well as head of ISI’s Quantitative Research Team.  Institutional Investor magazine ranked him top portfolio strategist for the past two years and for four of the past five. In 2009, Mr. Trahan also ranked third in the quantitative research category.  He joined ISI from Bear Stearns, where he served as a Senior Managing Director and Chief Investment Strategist for four years. Earlier, he was with Ned Davis Research and the Bank Credit Analyst Group. An economist by training and with a master’s degree in econometrics, Mr. Trahan was educated at the University of Montreal.

Stated Mr. Trahan, “I respect what Wolfe Research stands for: non-consensus, thorough, actionable research coupled with a high-touch approach to service.  I am thrilled to be with the firm, and I look forward to helping it continue to thrive and grow.” He added, “Macro research has proven to be extraordinarily important during these turbulent times. I think my understanding of the business cycle and how it affects the markets and specific stocks will allow me to further differentiate the Wolfe Research product with clients.”

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