Evangelizing The Human Capital Factor
Interview with Scott Colson, CIO of Irrational Capital
As a public equities portfolio manager who simply clicks a button to invest in a company, you are often so disconnected from the underlying business that it can be easy to forget how important people and culture are to the future success of the investment. On the opposite end of the spectrum is this week's guest, Scott B Colson, CFA, CAIA, who is the CIO of Irrational Capital. Scott is an evangelist for the Human Capital Factor, a framework that tries to capture the connection between human capital and stock performance.
The Human Capital Factor is the brainchild of author and behavioral scientist Dan Ariely, whose books I have read. So, I was excited to speak with Scott about:
· The founding of Irrational Capital and how Scott got involved;
· Examples of a few of the ETFs that Harbor Capital has launched using Irrational’s methodology;
· What types of companies score highly when it comes to the Human Capital Factor;
· The simplicity and alpha generating potential of using the Human Capital Factor; and
· The differences between the larger and smaller cap ETFs.
Please enjoy this fun and wide-ranging interview here:
The thing I was most curious about when I was chatting with Scott was how the firm's proprietary company scoring methodology, the Human Capital Factor, is actually used when constructing ETF portfolios. In this clip, Scott discusses three of the ETFs that Irrational Capital is involved with in order to highlight how the scoring influences portfolio construction.
The hits keep on rolling here at Compounders and we hope that you will stay tuned for next week’s release as well.
Sincerely,
Ben Claremon