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Irrational Capital Announces Strategic Partnership

Updated: Mar 25, 2019


Irrational Capital LLC

Feb 27, 2019, 06:17 ET


PHILADELPHIA, Feb. 27, 2019 /PRNewswire/ -- IRRATIONAL CAPITAL LLC announced a strategic partnership under which ValueAct Spring Master Fund has invested in investment vehicles managed by Irrational Capital.  Irrational Capital develops investment strategies that leverage statistically significant links between corporate culture and stock performance.

Led by renowned behavioral economist Dan Ariely, Ph.D., Irrational Capital was founded in 2017 to develop investment opportunities based on quantifying the nuanced relationship between employers and employees.  Ariely, together with business partner David van Adelsberg and a highly skilled team, believe they have discovered an investable correlation between behavioral factors and the market performance of public companies.

Irrational Capital understands a substantial portion of a typical company's value is based on intangible factors which comprise an organization's culture (such as trust, engagement, pride, alignment, equality and others) – that are not captured by accounting principles or traditional investment metrics.  Additionally, Irrational Capital asserts that the lack of measurement tools for these intangible assets may represent a new opportunity for investment selection. As a result, Irrational Capital has developed a rigorous method for identifying and quantifying aspects of corporate culture and their influence on long-term value creation.

Ariely said, "Investing in understanding and properly motivating human capital is one of the best drivers of growth.  Our work has uncovered what we call the 'Human Capital Factor,' which appears to be a predictor of value as evidenced by stock performance.  We are extremely excited to partner with ValueAct, a firm that shares our belief in the importance of corporate culture's impact on enduring value."

Jeff Ubben, Founder and Chief Executive Officer of ValueAct, said, "ValueAct has always believed that the best businesses are those defined by their long-term strengths and not by a consistent drive for short-term profitability.  When companies invest in culture and foster a deep connection to purpose among employees, they can simultaneously create long-term enterprise value and societal benefit.  The work of Dan, David, and their talented team shows that sustainable economic growth can be achieved by empowered, engaged workers operating in a supportive and collaborative environment."

Commenting on the new partnership, Martin Lipton, of Wachtell Lipton Rosen & Katz, and the author of the International Business Council of the World Economic Forum's, The New Paradigm, A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth said, "Many of us in the corporate governance community have intuitively understood that corporate culture matters to durable value creation, but Irrational Capital has now developed a way to quantify it. Their cutting-edge work, and ValueAct Spring Fund's investment in it, is a powerful validation of the importance of human capital in the creation of sustained corporate value."

About Irrational Capital LLC:

Irrational Capital LLC is a Philadelphia area-based asset manager.  The firm seeks to research, quantify and monetize statistically significant links between human behavior and market performance through systematic investment strategies.

This press release does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product. All information herein is for informational purposes only and should not be deemed a recommendation to purchase any security or investment product.

SOURCE Irrational Capital LLC