Mapfre AM, the asset management arm of the giant Spanish/LatAm insurer, Mapfre Group, is launching a fund that aims to exploit pricing inefficiencies in European equities caused by the behaviour of market participants.
Mapfre AM has developed a proprietary methodology for identifying opportunities caused by investors reacting to new information in exaggerated or irrational ways. The managers then apply detailed fundamental analysis to determine whether these equities represent attractive long-term investments.
Álvaro Anguita, CEO of Mapfre AM, says the funding team “have identified a set of circumstances in which certain cognitive biases have a tendency to make stock prices deviate significantly from their intrinsic value, offering a margin of security to invest cost-effectively, and at lower risk, over the long term”.
The fund will seek to invest primarily in companies that have a simple business model, are capable of generating cash, have a sustainable competitive advantage, a low level of indebtedness and, in many cases, managed by the founding families whose interests are well aligned with those of their shareholders.
The fund is backed by an advisory board which includes professors of neurology, economics and finance, and a security chief to bring added insights to the traditional stock-picking metrics.
Says Anguita: "We have brought together a great team of committed people who will help us integrate the finances of behaviouralism into our work as value investors."
The fund will be distributed mainly in Spain and France and will be domiciled in Luxembourg, so that it can be available to other international investors.