Values-based investing without compromise
At Archalos, we believe that good character, sound culture, and strong values are the foundation of a successful company and therefore are a strategic asset for investing. This means investors can invest in companies that support their values without conceding returns on that investment.
An innovative approach that goes beyond traditional methods
Most investors focus primarily on financial data, but at Archalos we understand picking a successful investment goes deeper. We’ve set out to identify those hard-to-see, intangible qualities of winning companies. We have developed a research-backed, innovative approach that measures those qualities by analyzing vast amounts of data.
Decades of experience identifying what makes a company succeed
With 50 years of combined investment experience, we’ve studied thousands of companies, managed capital across every market cycle, and seen what truly sets enduring businesses apart. Your hard-earned capital will be diligently invested by seasoned portfolio managers.
Corporate culture, strength, cohesion, alignment, and ethics
Small-Cap "Sin Stocks" Underperform by 1.1% Monthly
Key Metric
negative Alpha
Underperformance of Small-Cap "Sin" Portfolios
The Research
The narrative that "Vice Pays" may only be true for monopolies. A study on "Sin Stocks" (abortion, gambling, pornography) found that while large-cap vice stocks often outperform, **Small-Cap Sin Stocks** consistently underperform. The bottom quartile of sin stocks by market cap generated a negative alpha of **-1.10% per month** (1970–2016). This suggests that without the protection of monopolistic barriers to entry, companies engaging in morally controversial activities suffer from a "Reputation Tax" that destroys shareholder value.
Data Source:
Academic Source:
Key Finding
Small-cap sin stocks generated a negative alpha of -1.10% per month, contradicting the "vice pays" myth.
The Archalos Thesis
We view "Sin" as a scale risk. Philip Morris can afford lawsuits; a small tobacco startup cannot. The data shows that for small and mid-cap companies, engaging in controversial activities is a destroyer of value. Because we often hunt for alpha in the small-to-mid-cap space, applying an ethical screen is not just a moral choice; it is a quality filter that removes companies likely to bleed cash due to reputational headwinds.
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Operational discipline, continuous improvement, and pursuit of excellence
Internal Mobility
High internal mobility correlates with 20-30% better innovation and 15-20% higher revenue growth.
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Corporate culture, alignment, and ethics
Culture Premium
Strong cultures generate 4x revenue growth, 12x stock appreciation, and 700% net income growth.
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Governance quality
Crash Risk
Higher transparency in human capital metrics correlates with reduced stock price crash risk.
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Talent quality, turnover, and employee wellbeing
Engagement
Engagement is statistically linked to Customer Satisfaction (0.43), Innovation (0.43), and Profitability.
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Internal labor markets and promotion from within
Training ROI
Strong positive correlation (up to 0.66) between training investment and firm performance.
Strategic clarity, focus, and execution
Family Alpha
Family-owned firms generate a consistent ~3.7% annual excess return over peers.
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