Four fund managers from defunct firm Ardevora Asset Management have embarked on their own venture called Heuristik Capital.
Ben Fitchew, William Ayres, Fifo Afaf and Emilia Beck-Friis will launch a long-only fund investing in “unusual, high-quality” companies they believe can “surprise” both sell side analysts and investors over the long term.
To achieve this goal, they intend to apply behavioural psychology in their investment process.
Beck-Friis said: “We have a passion for psychology and understanding how people make decisions under uncertainty. Our novel investment process is borne of the behavioural toolkit of Daniel Kahneman and Amos Tversky and the academic literature around bias in markets.”
Kahneman sadly passed away recently and is best known for his book, ‘Thinking, Fast and Slow’. Tversky was his long-time collaborator and together they developed Prospect Theory, which involves behavioural economics, judgment and decision making.
At Heuristik Capital, the four portfolio managers will focus on cognitive psychology in markets, especially those that lead certain actors to try to establish forecasts.
As the firm’s LinkedIn profile explained: “We don’t think it is possible to predict the future with any meaningful degree of precision. As far as we can tell, no one is very good at it.
“We prefer to play a different game. We study the mistakes of those who make a living trying to forecast a company’s future – sell-side analysts. We are particularly interested in persistent error patterns that indicate bias. We spend our time understanding the business models and conditions that lead to bias.”
Ardevora Asset Management shut down earlier this year after its asset under management fell from £10bn at the end of 2021 to £1.4bn at the end of 2023.
The company ran five open-ended funds – four global equity strategies and one UK equity portfolio – and managed a range of segregated mandates for third parties.
Ardevora was established in 2010 by Jeremy Lang and William Pattisson, who made their name at Liontrust Asset Management. Fitchew worked with the duo at Liontrust from 2002 onwards before joining them at Ardevora.