🍋 Greenwashing Party's Over

Short Squeez
May 24, 2022

Together With

"Life is essentially an endless series of problems. The solution to one problem is merely the creation of another." — Mark Manson

Good Morning! Snap became the latest tech stock to get clapped, falling more than 30% in after-hours trading, after CEO Spiegel, warned of slow revenue growth. The tech industry's outlook is up in the air elsewhere too. Airbnb is exiting China and will remove all Chinese homes and experiences by mid-summer. Also removing things is NYC, getting rid of its last public payphone yesterday. GameStop on the other hand is adding things to become a legitimate business, and not just a meme stock. It's launching a digital wallet to hold cryptocurrencies and NFTs. Tbh not sure if a crypto/NFT wallet is a step in the right direction towards legitimacy. 

If you are looking to get exposure to real estate investing (while stonks keep crashing), check out today's sponsor, LEX, which has created a new way to invest in real estate.

1. Story of the Day: Greenwashing Party's Over

If you haven't been exposed to ESG ratings in your line of work yet, don't worry, it's coming for you. Recently, Tesla made headlines for being kicked out of an S&P 500 ESG Index, while Exxon and Marathon Oil were simultaneously added. That didn't make sense to a lot of people, so it begs the question, what exactly are people looking for through their green glasses when it comes to ESG?

Many people take umbrage to seeing ESG requirements on potential investments, and often with good reason. A common argument is ESG in theory is great, but in practice falls very short. Folks in this camp believe that ESG is nothing more than a marketing tactic because there is a demand for funds that have ESG in the name. They will often do the bare minimum to get a little green leaf tattooed next to their name, but aren't actually making significant strides in being greener. This is called "greenwashing," and the SEC is here to snuff out all the fake tree huggers.

On Monday, the SEC charged BNY Mellon Adviser $1.5 million after BNY misstated ESG policies for the funds it managed. "From July 2018 to September 2021, BNY Mellon Investment Adviser represented or implied in various statements that all investments in the funds had undergone an ESG quality review, even though that was not always the case."

When ESG loosely means "buy companies that are doing good for the world," it is easy to see why it's tough to enforce ESG policies. In any case, the SEC doesn't care what your ESG review policy is, just that you have one. 

Short Squeez Takeaway: In an industry based on facts and figures, there sure is a whole lot left up to interpretation. The SEC is trying to take the imagination out of it all, and make sure that investors are actually investing in the products they think they're investing in. That is a good thing. If actual green companies get left out of ESG indexes/funds because there are better returning options out there, that is a bad thing. The grey, or green, area of ambiguity is inefficient, and something that likely won't get cleaned up any time soon.

Source: Bloomberg

2. Markets Rundown

Stocks were up today after seven weeks of losses, but even an uptick in tech and GameStop's digital wallet couldn't help crypto assets.

Movers & Shakers

  • (+) JPMorgan Chase ($JPM) +6% after saying they expect to reach key return targets sooner than expected.
  • (+) VMWare ($VMW) +25% as the cloud stock was found out to be in talks to be acquired by Broadcom.
  • (–) Gap ($GPS) -6% after being downgraded by Citi.

Private Dealmaking

  • Caribou, a DC based auto financing platform, raised $115 million in Series C funding.
  • Sequoia Capital India led a $36.8 million Series B round for Chinese metaverse social network BUD.
  • Also out of India, 1K Kirana, a shopping app, raised $25 million in Series B funding.
  • Blackstone's credit arm bought a 49% stake in LNG company, Elba Liquefaction Co., from EIG Global Energy Partners.
  • Oaktree Capital Management and CURA Vermögensverwaltung launched a public takeover offer for Deutsche EuroShop.
  • Ted Baker said it's picked a buyer, after Sycamore Partners bailed.

3. Top Reads

  • Hedge Funder calls back to Fraudster Bernie Madoff (BB)
  • Hollywood PE, en espanol (NYT)
  • Hot Everyone Summer (BB)
  • Activision workers vote to unionize (NYT)
  • Traffic back to pre-pandemic levels (BB)
  • Stagflation fears rising (Fox)
  • Art dealer's $86 million fraud lands him 7 years in prison (BB)
  • Shale drillers pump out dividends, not oil and gas (WSJ)
  • Goldman employee shot and killed in subway shooting (BB)

A Message from LEX: Can Office Buildings IPO?

They can now, thanks to LEX.

That’s right, LEX is taking buildings public – and that’s good news for your investment portfolio.

Traditionally, commercial real estate investing has been a lucrative (but not particularly accessible) investment opportunity. Even if you did have the money and accreditation to get involved, the best deals were hard to come by.

Who has time for that? Not us (we’re busy writing this damn newsletter).

With LEX, you can easily create a portfolio by picking the buildings you want to invest in, buying equity shares, and watching as those sweet, sweet dividends roll in. Check out the properties they’re working with here – they’ve already got some in NYC and more offerings coming in Seattle.

4. Book of the Day: The Comfort Crisis: Embrace Discomfort To Reclaim Your Wild, Happy, Healthy Self

In many ways, we’re more comfortable than ever before. But could our sheltered, temperature-controlled, overfed, underchallenged lives actually be the leading cause of many our most urgent physical and mental health issues?

In this gripping investigation, award-winning journalist Michael Easter seeks out off-the-grid visionaries, disruptive genius researchers, and mind-body conditioning trailblazers who are unlocking the life-enhancing secrets of a counterintuitive solution: discomfort.

Easter’s journey to understand our evolutionary need to be challenged takes him to meet the NBA’s top exercise scientist, who uses an ancient Japanese practice to build championship athletes; to the mystical country of Bhutan, where an Oxford economist and Buddhist leader are showing the world what death can teach us about happiness; to the outdoor lab of a young neuroscientist who’s found that nature tests our physical and mental endurance in ways that expand creativity while taming burnout and anxiety; to the remote Alaskan backcountry on a demanding thirty-three-day hunting expedition to experience the rewilding secrets of one of the last rugged places on Earth; and more.

Along the way, Easter uncovers a blueprint for leveraging the power of discomfort that will dramatically improve our health and happiness, and perhaps even help us understand what it means to be human. The Comfort Crisis is a bold call to break out of your comfort zone and explore the wild within yourself.

“We are living progressively sheltered, sterile, temperature-controlled, overfed, underchallenged, safety-netted lives.”

5. Short Squeez Picks

  • Hedge against inflation with institutional-quality farmland. Invest today through FarmTogether. (6-13% target returns, 2-9% target cash yields. Low minimum of $15k)
  • A bunch of VC founders talk recession (Video | 52 mins)
  • How Hedge Funds destroyed Terra Luna UST (Video | 12 mins)
  • Timing is everything

6. Daily Visual: FIFAmerica

Potential sites for the 2026 FIFA World Cup

Source: Axios

7. Daily Acumen: Bias Toward Action

"Unfortunately, most of us, most of the time, don’t have a bias toward action. We don’t start a conversation with the cute stranger we’ve been admiring. We don’t ask for the raise we feel we’ve earned. We don’t move to the city we’ve been dreaming of since childhood.

And we don’t do these things because not doing them is easier than acting. That’s not to say the outcome will be better. It will almost always be worse. But the comfort of the discontented status quo is much less scary than the potential of the unknown."

8. Crypto Corner

  • Bitcoin could drop to $8,000, a 70% drop
  • How is this crypto crash different?
  • Ethereum close to a big facelift
  • "I was arrested for knocking on Luna boss's door"
  • FTX quietly shopping for brokerage startups
  • eBay drops NFT collection to non-crypto mainstream buyers

9. Memes of the Day

   

    

                                                  

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