At JL Warren Capital, we believe that the equity market is essentially inefficient – an idea that squarely contradicts one of the great canons of modern finance theory, Eugene Fama’s efficient market hypothesis. This theory asserts that financial asset prices fully reflect all available information at all times. Therefore, no one can systematically outperform the market by using an informational advantage – one can only beat the market through luck. The spectacular and repeated failure of this hypothesis has barely dented its popularity, even following the devastating financial crisis that erupted at the end of 2007.
We believe that market inefficiencies can exist when any of the following forms of knowledge are lacking: data, understanding or creative intelligence. Information consists of patterns and regularities in data; understanding comes from testing these patterns in the light of hypotheses and theories; and creative intelligence arises when one leaps from analysis using established facts and theories to new, original insights. It is precisely these kinds of insights that help successful investors form investment decisions.
JL Warren Capital LLC was founded by Ms. Junheng Li in 2012. Prior to founding the firm, Ms. Li was a senior equity analyst at Aurarian Capital Management, a long and short hedge fund in New York. Previously, Ms. Li was an equity analyst in the global small-cap team at Franklin Templeton Fiduciary. Ms. Li received an MBA from Columbia Business School and a BA in Economics from Middlebury College (summa cum laude). Ms. Li is the author of her business memoir “Tiger Woman on Wall Street – Winning Business Strategies from Shanghai to New York and Back” (McGraw-Hill, 2013) and a regular contributor to Bloomberg View. Her work has appeared on Bloomberg, The Wall Street Journal, Forbes, and Caixin, among others. She has also appeared on television and radio programs including CNBC, Bloomberg, CCTV, and NPR.