Assessing Manager Skill and Behavioral Alpha
Interview with Clare Flynn Levy, Founder & CEO of Essentia Analytics
I had the pleasure of working with Clare Flynn Levy and the firm she founded, Essentia Analytics, when I was at Cove Street. Because of that, it was fun to catch up with Clare to hear about how the manger decision-making assessment software and the firm have matured and improved over the years.
In this episode, we talked a lot about how investors can improve their decision-making (and thus returns) but there was one part that stood out to me and I think represents why all equity managers should listen to this episode. I asked Clare about if there was one decision type that trips up every manager. The answer to that (spoiler alert!) was no. But what she did say is that most of the managers they work with are indeed good stock pickers. It is just all of the other stuff--such as timing, position sizing and adding/trimming--that detract from their returns.
You can find the full episode here:
So many great companies were started by people who wanted a product for themselves, but saw that it didn't exist in the market. That is the the case with Clare F and the founding of Essentia. In this clip, Clare talks about being a portfolio manager and looking for--but not finding--a software that could help her assess her own decision-making.
I hope you enjoyed this episode and will stay tuned for another great interview with a founder that will be released next week.
Sincerely,
Ben Claremon