‘Woke, Inc.’ Author Ramaswamy targets Apple and Disney
Apple and Disney face new pressure from the right
A conservative investor, backed by Peter Thiel and Bill Ackman, has two new targets in its anti-ESG campaign. Yesterday, Vivek Ramaswamy sent letters to the CEOs of Apple and Disney, urging them to refrain from make political statements on behalf of their companies, or hiring decisions based on race, gender, or political beliefs.
Ramaswamy has become one of Wall Street’s most prominent critics of the environmental, social and governance investment movement. Earlier this year, the investor, who is the author of ‘Woke, Inc.’, launched Strive Asset Management, which he says will fight pressure on companies to consider liberal politics before financial results. Its first energy-focused exchange-traded fund was launched last month and already has about $320 million in assets. Its ticker symbol, which echoes Ramaswamy’s prescription for the energy industry, is DRLL.
Strive’s second fund, the Strive 500 ETF, which invests in large public companies, launches today. Ramaswamy’s plan is to use the power of shareholder votes to refocus big business on maximizing profits, a goal that Ramaswamy says boards have strayed from. One of the first issues he tackles is the hiring policy; Apple, says Ramaswamy, is a prime example of the problem.
Ramaswamy urges Apple to end its “racial equity audit” and remove diversity considerations from its hiring and compensation policies. His letter suggests that if Apple does not change its policies, Strive will try to raise the issue at its next shareholder meeting. In his letter to Disney, Ramaswamy says the company has hurt its brand by speaking out against government policies that don’t directly affect its business, namely Florida’s recent law that limits discussion of sexuality and gender in the classroom. “We would be better served to have an honest debate about why we need ESG,” Ramaswamy told DealBook. “You can argue that companies have a social responsibility that goes beyond profits, but to modernize ESG to say it’s about maximizing long-term profits, well, that glove just doesn’t fit. .”
This is part of a growing debate about the influence of ESG investors. Critics claim that the managers of these funds limit companies’ profits and competitiveness. ESG proponents say looking at the long-term impact of business decisions on the environment and society may sacrifice short-term gains, but will lead to higher profits and more sustainable businesses . In a test this weekend, Martin Lipton, the prominent corporate lawyer and founding partner of Wachtell, Lipton, Rosen & Katz, argued that companies have a legal responsibility to look at these longer-term issues. “We continue to believe that it is essential that boards operate under a governance model that allows consideration of ESG principles and sustainable investment strategies,” he wrote.
HERE’S WHAT HAPPENS
Chamath Palihapitiya completes two of his SPACs. The financier said this morning that he was going return their funds to investors, having failed to find suitable fusion targets for either. Palihapitiya, who has become a serial SPAC mogul during the pandemic, said he sees these funds as “one of many tools” to invest in.
Supply chain issues are costing Ford dearly. Shares of the automaker fell nearly 5% before market after it announced it would pay $1 billion more for parts this quarter. Ford blamed inflation and shortages.
New York City is facing a budget crisis. City officials expect tax revenues — including those from businesses and personal income taxes — to plummet, leading to what the New York State Comptroller believes will be a $10 billion budget shortfall in 2026. This could lead to drastic cuts to city services, including garbage collection and policing. .
House Republicans are reportedly considering investigating the US Chamber of Commerce. GOP lawmakers can start pressure group investigations and some of its biggest members if they take over the House this fall, according to The Intercept. Behind the drive: Republican opposition to House support for ESG
The Biden administration’s attempt to block a deal with UnitedHealth is dismissed. A federal judge dismissed Justice Department lawsuit to stop Medicare from buying Change Healthcare. It was the latest setback for the administration’s more aggressive approach to antitrust enforcement.
Exclusive: Theragun Parent Company Raises $165 Million
Therabody, maker of the Theragun hand-held massager, a cult favorite among athletes, has raised $165 million, DealBook is the first to report. The fundraising, which was led by private equity firm North Castle Partners, comes as wellness companies seek to regain their footing as the pandemic recedes.
At the height of the pandemic, the money was poured into home fitness. Sales of Peloton and Tonal training equipment have exploded. As companies like Peloton scale back operations as demand wanes, Therabody CEO Benjamin Nazarian says the pandemic has highlighted the need to take care of your body. “Whether it’s a recession or not, your body is the most precious thing you have in your life,” he said. Last year, Therabody’s revenue hit $396 million, up from $224 million in 2020.
The leaders did not disclose the valuation of the latest fundraising. “The idea of having recovery products in your home – we still think that’s a pretty young concept,” said Jon Canarick, managing partner of North Castle, whose investments include Barry’s Bootcamp and HydroMassage.
Theragun will use the money to invest in digital content and acquisitions. It’s also announcing eight new products today, including smart glasses to help relieve facial tension and headaches, and a new Theragun mini. The funding includes investments from a wide range of celebrities, including comedian Kevin Hart’s Hartbeat Ventures and model Karlie Kloss. “I was a consumer and a super fan for a while,” Kloss told DealBook. She did not disclose the size of her investment.
Pushing back the copiers will be key. Therabody has settled with more than 15 companies for intellectual property infringement. Still, he continues to see competitors offering massage guns cheaper than his $400 Theragun Elite. People “think the low price is going to take the whole market – and that’s probably a very naïve understanding of I would say any consumer business,” Nazarian told DealBook. “Tell me an industry where there is no premium brand.”
A mine in Quebec could help solve the shortage of lithium
A Canadian lithium mine owned by Australian company Sayona Mining could produce the raw materials needed to advance the Biden administration’s climate goals and rival China’s dominance in the battery supply chain. If it opens as planned early next year, it will be North America’s second-largest source of lithium. But the mine has had multiple owners, some of whom have filed for bankruptcy, and extracting the materials needed for electric vehicles is an arduous process, writes Jack Ewing of The Times.
The price of lithium has quintupled since mid-2021, pushing the cost of electric vehicles out of reach for many drivers. (Last year, the average new electric car in the United States cost about $66,000, a few thousand dollars less than the median household income.) Dozens of lithium mines are in various stages of development in America. North, and Canada is determined to become a major source of raw materials and components for electric vehicles. But most projects are years away from production. Even if they raise the billions of dollars needed to get started, there is no guarantee that they will produce enough lithium to meet the continent’s needs.
The stakes are rising for the automotive industry. The Inflation Reduction Act, which was passed in August, provides incentives and subsidies for car buyers and automakers. But to benefit from the savings, which are worth a total of $10,000 or more per electric vehicle, battery manufacturers must use raw materials from North America or a country with which the United States has a trade agreement. Whether there will be enough lithium to meet the growing demand for electric vehicles is another question. “Those of us in the industry are quite confident that lithium will be in short supply over the next decade,” said Keith Phillips, chief executive of Piedmont Lithium, which owns 25% of the Sayona Quebec project. He added: “Others take the opposite view.”
“It was totally against what I was negotiating for. I wanted to be the managing director in terms of running the business and making public statements.
— Marc Russell, the outgoing CEO of electric vehicle maker Nikola, testifying at the securities fraud trial of company founder Trevor Milton. Russell said he opposed Milton becoming executive chairman and maintaining power.
An expensive reality check for the Metaverse
The Metaverse stock rout is having a tangible effect on shareholders big and small. Exhibit A: Mark Zuckerberg, the founder of Meta, saw his personal fortune decrease by $71 billion this yearaccording to the Bloomberg Billionaires Index.
Technology is one of the worst performing sectors in the S&P 500 this year, and within that blur of red is the smaller subset of so-called metaverse stocks, or tech companies that build virtual worlds for gaming, socializing, and working. Investor Cathie Wood and Goldman Sachs were among those heralding the Metaverse as the biggest breakthrough in consumer technology since the introduction of the iPhone. They predicted the metaverse would be worth trillions by the end of the decade.
Zuckerberg changed his company’s name to Facebook’s Meta last fall and has committed billions of dollars in investments to make his vision for the metaverse a reality. But investor appetite for tech companies embarking on ambitious, capital-intensive projects has waned as interest rates soar. This has hurt metaverse stocks of all kinds. Exhibit B: The Metaverse ETF is down 46.7% since its inception last year. Here are his top five holdingscompared to the S&P 500:
The poor performance of the share price is not only due to the metaverse. The slowing global economy, soaring energy prices, and bear market in crypto assets are also weighing on many of these stocks.
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