🍋 ESG Bust

Author

Short Squeez
October 26, 2022

Together With

“You make most of your money in a bear market, you just don’t realize it at the time.” — Shelby Cullom Davis 

Good Morning! Winter is coming - yesterday was the last day the sun will set after 6pm in New York till next March. Elon Musk told his inner circle that he plans to buy Twitter by Friday after several delays. Juul is weighing an investor bailout after the FDA banned sales of the e-cigarette. 

Goldman Sachs thinks this year’s buyout activity will match 2021 despite the current credit environment. Kanye West lost $1.5 billion of his net worth yesterday after major brands, including Adidas, ended partnerships with the rapper.

And Beyond Meat is rolling out its steak alternative in grocery stores starting this week - just in time as food prices rise across the country. 

Inflation has been hitting your wallet at grocery stores, restaurants, and gas stations all year. Upside has come up with a way to get your money back, check 'em out. 

1. Story of the Day: ESG Bust

Unless you’ve been living under a rock, you’ve probably heard of the ESG investing boom. The industry became a trillion-dollar one this year, but a recent study by Jefferies found that new ESG fund classifications are down 84% from 2021.

Most major companies jumped on the bandwagon over the past few years to appease environmentally-conscious investors. ESG proponents argue that, in addition to social issues, ESG funds also account for risks and opportunities overlooked by traditional financial models. 

But the funds haven’t been without controversy. Greenwashing, when companies claim to be more environmentally-friendly than they actually are, got the attention of U.S. and European regulators. Some, including Elon Musk have since called ESG investing a ‘scam’.

This year, fund managers are creating and reclassifying fewer ESG funds as they worry about getting caught up in regulatory crosshairs. There are 60% fewer new ESG funds this year (compared to last) as institutional investors wait out the storm.

A crackdown on greenwashing is coming, and fund managers are bracing for it. Investors also want a clearer definition of what actually institutes ESG - the criteria has been rather subjective over the past few years.

Takeaway: Like it or not, ESG investing is probably here to stay. It’s been a down year for new funds, and investors are waiting for regulators to clean up the ESG mess. Investors hope ESG will evolve to become more profit-oriented and less politically polarized. If it does evolve for the better, funds can be a model for the financial services industry and look beyond just financial metrics to maximize returns.

2. Markets Rundown

If you want access to Wall Street insider interviews, industry deep-dives, and investment ideas, check out our Insiders newsletter.

Wall Street extends rally on signs the Fed will ebb rate hikes.

Movers & Shakers

  • (+) Upstart ($UPST) +12% as the AI-powered lending company bounces back from down year.

  • (+) Logitech ($LOGI) +11% after the company’s cost cutting helped manage downturn.

  • (–) Xerox ($XRX) -14% after the company’s Q3 profit was half of what was expected.

Private Dealmaking

  • ConnexPay, a payments platform for the travel industry, raised $110 million 

  • RapidSOS, a data platform for first responders, raised $75 million

  • Normunity, a cancer therapeutics startup, raised $65 million

  • Merge, a software integration platform, raised $55 million

  • The Coterie, an estate planning platform for startups, raised $40 million 

  • Proemion, a software developer, raised $33 million

3. Top Reads

  • Home price growth slowed by record amount in August (YF)

  • Amazon will add Venmo as a payment method (Axios)

  • Microsoft beats revenue estimates but cloud growth comes in short (CNBC)

  • Stock picking isn’t dead - but for most investors it might as well be (CNN)

  • Fake billionaire, Harvard MBA grad denied bail as judge calls him ‘economic danger’ to public (CNBC)

  • Telehealth unicorn Cerebral lays off 20% of staff (TC)

  • Airlines have the passengers, now they need the planes (CNBC)

  • Under the hood of the electric vehicle revolution (Vox)

  • Rishi Sunak wife worth $800 million, richer than King Charles III (Fox)

A Message from Upside: Get Your Money Back

Inflation has been hitting your wallet at grocery stores, restaurants, and gas stations all year.

What if there was a way to get some of that money back?

Don’t worry, Upside has got you covered.

Upside is an app that pays you back a percentage of your purchases in cold, hard cash. Not points. Not credits. Cash.

$1M is being paid back to users each week, and more than $300M total cash has been paid back since Upside’s inception.

Start making money back by using Upside today.

4. Book of the Day: Delinquent

Delinquent takes readers on a journey from Capital One’s headquarters to street corners in Detroit, kitchen tables in Sacramento, and other places where debt affects people's everyday lives. 

Uncovering the true costs of consumer credit to American families in addition to the benefits, investigative journalist Elena Botella—formerly an industry insider who helped set credit policy at Capital One—reveals the underhanded and often predatory ways that banks induce American borrowers into debt they can’t pay back.

Combining Botella’s insights from the banking industry, quantitative data, and research findings as well as personal stories from interviews with indebted families around the country, Delinquent provides a relatable and humane entry into understanding debt. 

Botella exposes the ways that bank marketing, product design, and customer management strategies exploit our common weaknesses and fantasies in how we think about money, and she also demonstrates why competition between banks has failed to make life better for Americans in debt.

Delinquent asks: How can we make credit available to those who need it, responsibly and without causing harm? Looking to the future, Botella presents a thorough and incisive plan for reckoning with and reforming the industry.

“When things go wrong in America, we are often on our own.”

5. Short Squeez Picks

A Message from Trending Market News

A biotech company could be on the verge of curing Leukemia.

Some must also contend with relapsed, or recurrent, acute myelogenous leukemia (AML), which means the leukemia comes back after reaching remission.

However, there may be some good news on the horizon.

A clinical-stage biopharmaceutical company developing targeted radiotherapies to deliver cancer-killing radiation with cellular-level precision – may be nearing a potential treatment with its current Phase 3 trials.

6. Daily Visual: Millennials Shop on Mobile & During Weekdays

When and how do US Millennial Digital shoppers shop?% of respondents in each group, 2019 vs 2022

Source: Insider Intelligence

7. Daily Acumen: Giving it a Second Thought

“Some problems lend themselves to reexamination. A second, third or even fourth thought is productive, because our initial impulses might not reflect our best effort at understanding the nuances of the situation.

But many problems simply create more thoughts, without productive output. As we confront something that is unlikely to have a simple or productive way forward, it’s easy to go into a mental tizzy imagining solutions.

The art is understanding which sort of problem we’re facing. And devoting the right amount of thought (not less and definitely not more) to the situation we’re in. Spending cycles on categorizing the problem is probably more productive than wasting time on problems that don’t deserve our effort.”

Source: Seth Godin

8. Crypto Corner

9. Memes of the Day

 

 

 

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