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  • Irrational Capital

New Release from J.P. Morgan: ‘Measuring an Intangible Asset: The Human Capital Factor’

Previously, JP Morgan’s Quantitative Research Team published ‘Creating an Innovation Culture Score Using Human Capital Factor Data’ (January 2022) and ‘Introducing the Human Capital Factor’ (March 2021), each of which is a deep dive into our proprietary HCF data and research. These pieces represented two profound validations of our work by the financial research powerhouse within a year’s time.

We are honored that the same JP Morgan team has now published another report on our work: ‘Measuring an Intangible Asset: The Human Capital Factor.’ Noteworthy highlights from the report include:

"The Human Capital Factor exhibits noteworthy long-term outperformance...All-in-all Irrational Capital demonstrated that their approach to quantifying human capital using employee feedback-based data can deliver significant outperformance for a wide array of applications. The takeaway from this section is that human capital is not being correctly priced by the market, and hence provides the opportunity for outperformance for strategies which incorporated human capital as a factor.”

This note is the result of a DeepFin Workshop hosted by JP Morgan in October, during which the Irrational Capital team demonstrated the link between company culture and future equity performance and how it can be made investable. The workshop (and corresponding report) demonstrates the incredible strength of the HCF through examples that show how the Human Capital Factor can be used in a wide range of alpha generating applications.

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