Amid the scandals on Wall Street, Sanford C. Bernstein has been celebrated for its research independence -- but even the well intentioned occasionally blow it. Ironically, one of the money managers with the most stock-picking clunkers over the past few months has been Bernstein and its parent, Alliance Capital. First, Florida’s state pension fund filed suit against Alliance for buying Enron on its way down last year; now comes word that Bernstein’s flagship value fund, Bernstein Strategic Value, spent the past few months increasing its positions in telecom horror shows Qwest Communications and WorldCom. How come the firm’s diligent, uncompromised analysts didn’t ferret out the accounting chicanery for their fund manager brethren? “If management doesn’t tell you the truth, it doesn’t matter how much research you do,” says Alliance vice chairman Roger Hertog, who was Bernstein’s president before the merger. “These are small positions, and the portfolio in question is beating its benchmark by 600 basis points. Remember, the nature of investing is that occasionally you are wrong.”
