On the Adjusted for Risk podcast, host Ryan Nauman interviews Haren Bhakta, founder and CEO of the Inside Ownership Index, who explains how the S&P 500’s free-float weighting effectively underweights shares held by controlling insiders and can end up buying more of founder-led companies after key leaders die.
Bhakta describes manually compiling 20 years of S&P 500 proxy filings to aggregate insider-ownership data and creating a passive index that weights companies by insider ownership as a “skin in the game” approach. He argues high ownership aligns management with shareholders, supports long-term innovation, and avoids value-destroying incentives, citing ownership patterns among 100-baggers and major S&P value destroyers. He also warns that proxy voting power concentrated in large asset managers entrenches mediocre leadership.
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Learn more about Inside Ownership Index:
00:00 Welcome and Guest Intro
01:08 Origin of the Index
02:04 Free Float Problem
03:17 Building the Dataset
08:02 Why Ownership Matters
11:50 Power Law Leaders
14:37 Hundred Bagger Evidence
18:00 Long Term Culture Edge
27:24 Downside Protection
33:57 Passive Voting Risks
38:27 How Advisors Use OWN
40:25 Where to Learn More
41:29 Closing and Subscribe
