STANDARD DEVIATIONS PODCAST: Clare Flynn Levy – Good Behavior, Good Returns?

Prior to founding Essentia, Clare spent 10 years as a fund manager, both active equity (running over $1B of pension funds for Deutsche Asset Management) and hedge (as founder and CIO of Avocet Capital Management, a specialist tech fund manager). She ultimately “went native” into the software space as President of Beauchamp Financial Technology, a market-leading provider of portfolio management systems to hedge funds, which was acquired by Linedata Services S.A. Clare’s vision for Essentia is based on years of being the customer, followed by years of listening to the customer.

Tune in to hear:

• What does Clare and her team at Essentia Analytics focus on specifically?
• How can one score the decision making skill involved in stock picking when so much is relative to timing? How does Essentia Analytics score all 7 data points they lay out on their website?
• One of the trick things about behavioral investing is you can get a good result for a bad reason and vice versa. How does Clare’s team think about this and try to account for it?
• Recent research Clare and her team did shows that decision making hygiene is 1.5x more predictive of beating a benchmark in a subsequent year. Can she tell us more about this study and its implications?
• Why does the above correlation/relationship lose predictive power after 3 years on average?
• Could greater awareness, using tools like this, make fund managers more aware of issues like style drift?
• How can we make a compelling case that gets people to focus more on process and less on outcomes?