Why Insider 'Skin in the Game' May Beat the S&P 500

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.Connect with Ryan Nauman:LinkedInXLearn more about Inside Ownership Index:Related:Russell’s Rebalance Is a Healthy Pruning Amidst an Epic Small-Cap Run00:00 Welcome and Guest Intro01:08 Origin of the Index02:04 Free Float Problem03:17 Building the Dataset08:02 Why Ownership Matters11:50 Power Law Leaders14:37 Hundred Bagger Evidence18:00 Long Term Culture Edge27:24 Downside Protection33:57 Passive Voting Risks38:27 How Advisors Use OWN40:25 Where to Learn More41:29 Closing and Subscribe