‘Woke up, Inc.’ Writer Ramaswamy takes intention at Apple and Disney

A conservative investor backed by Peter Thiel and Bill Ackman has two new targets in his anti-ESG campaign. Yesterday, Vivek Ramaswamy sent letters to Apple and Disney CEOs urging them not to make political statements on behalf of their companies or base hiring decisions on race, gender or political beliefs.

Ramaswamy has emerged as one of Wall Street’s most prominent critics of environmental, social and governance investing. Earlier this year, the investor, the author of Woke, Inc., launched Strive Asset Management, which he says will ease the pressure on companies to consider liberal policies before profits. Its first exchange-traded fund, focused on energy, launched last month and already has approximately $320 million in assets. Its ticker symbol, reflecting Ramaswamy’s recipe 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 companies on maximizing profits, a goal Ramaswamy says boardrooms have strayed from. One of the first issues it addresses is recruitment policy; Apple, says Ramaswamy, is a prime example of the problem.

Ramaswamy is calling on Apple to end its “racial justice review” and remove diversity considerations from its hiring and compensation policies. His letter indicates that if Apple doesn’t change its policies, Strive will attempt to raise the issue at its next shareholder meeting. In his letter to Disney, Ramaswamy says the company has damaged its brand by speaking out against government policies that don’t directly affect its business, namely Florida’s recent law restricting discussion of sexuality and gender in the classroom . “We would be best served by having an honest debate about why we need ESG,” Ramaswamy told DealBook. “You can argue that companies have a social responsibility that goes beyond profit, but retooling ESG to be about long-term profit maximization doesn’t fit.”

It’s part of a growing debate about the influence of ESG investors. Critics say that managers of such funds limit companies’ profits and competitiveness. ESG advocates say that looking at the long-term environmental and social impact of corporate decisions might sacrifice short-term gains, but will lead to higher profits and more sustainable companies. In an essay this weekend, Martin Lipton, the prominent corporate attorney and founding partner of Wachtell, Lipton, Rosen & Katz, argued that companies have a legal responsibility to consider these longer-term issues. “We continue to believe it is important that boards operate under a governance model that allows for the consideration of ESG principles and sustainable investment strategies,” he wrote.

Chamath Palihapitiya shuts down two of its SPACs. The financier said this morning it would return their funds to investors after failing to find suitable merger targets for the two. Palihapitiya, who became SPAC’s series mogul during the pandemic, said he views such funds as “just one of many tools” to invest.

Supply chain issues are costing Ford a lot of money. The automaker’s shares fell nearly 5 percent premarket after it said it would pay $1 billion more for parts this quarter. Ford blamed inflation and shortages.

New York City is facing a financial crisis. City officials expect tax revenues — including from businesses and income taxes — to fall, leading to a $10 billion budget deficit in 2026, according to estimates by the New York State Audit Office. This could lead to drastic cuts in city services, including garbage collection and police.

House Republicans are reportedly considering investigating the US Chamber of Commerce. GOP lawmakers could begin investigations into the lobby group and some of its biggest members if they retake the house this fall, according to The Intercept. Behind the Action: Republican opposition to the Chamber’s support for ESG

Biden administration’s offer to block a UnitedHealth deal is rejected. A federal judge dismissed the Justice Department’s lawsuit to prevent the health insurer from buying Change Healthcare. This was the latest setback to the government’s more aggressive approach to antitrust enforcement.

Therabody, maker of the Theragun handheld massager, a cult favorite among athletes, has raised $165 million, DealBook is the first to report. The funding round, led by private equity firm North Castle Partners, comes as wellness companies try to get back on their feet as the pandemic wanes.

Money poured into home fitness at the height of the pandemic. Sales of Peloton and Tonal training equipment skyrocketed. As companies like Peloton scale back as demand slacks, Therabody CEO Benjamin Nazarian says the pandemic has highlighted the need to take care of your body. “Recession or not, your body is the most valuable thing you have in your life,” he said. Last year, Therabody sales reached $396 million, up from $224 million in 2020.


Sep 20, 2022 at 6:53 am ET

Executives have not disclosed the evaluation of the last round of fundraising. “The idea of ​​having recovery products in your home – we think it’s a fairly young concept,” said Jon Canarick, a managing partner at North Castle, whose investments include Barry’s Bootcamp and HydroMassage.

Theragun will use the money to invest in digital content and acquisitions. Also today, the company is announcing eight new products, including smart goggles to relieve facial tension and headaches, and a new mini theragun. The funding includes investments from a wide range of celebrities, including Hartbeat Ventures by comedian Kevin Hart and model Karlie Kloss. “I was a consumer and a superfan for a while,” Kloss told DealBook. She did not provide any information about the amount of her investment.

Repelling copycats will be key. Therabody has settled with more than 15 companies over IP violations. Still, there are still competitors offering massage guns cheaper than the $400 Theragun Elite. People “think that the low price point is going to take over the entire market — and that’s probably a very naive understanding of, I’d say, any consumer business,” Nazarian told DealBook. “Name an industry that doesn’t have a premium brand.”

A Canadian lithium mine owned by Australian company Sayona Mining could produce the raw materials needed to advance the Biden government’s climate goals and rival China’s dominance in the battery supply chain. When scheduled to open early next year, it will be North America’s second lithium well. But the mine has had multiple owners, some of whom have filed for bankruptcy, and mining the materials needed for electric vehicles is an arduous process, writes The Times’ Jack Ewing.

The price of lithium has quintupled since mid-2021, making the cost of EVs prohibitive for many drivers. (Last year, the average new electric car in the US cost about $66,000 — just a few thousand dollars less than the average household income.) Dozens of lithium mines are at various stages of development in North America, and Canada is poised to become a major source for 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’s no guarantee they’ll supply enough lithium to meet the continent’s needs.

The stakes for the auto industry are rising. The anti-inflation law passed in August provides incentives and subsidies for car buyers and automakers. But to qualify for the savings, which total $10,000 or more per electric vehicle, battery manufacturers must use raw materials from North America or a country with which the US has a trade agreement. Whether there will be enough lithium to meet the increasing 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 percent of the Sayona project in Quebec. He added: “Others take a contrary view.”

– Mark Russell, the outgoing CEO of electric vehicle maker Nikola, testifies in the securities fraud trial against company founder Trevor Milton. Russell said he was opposed to Milton becoming CEO and staying in power.

The defeat in Metaverse stock is having a tangible impact on shareholders large and small. Exhibit A: Mark Zuckerberg, the founder of Meta, has seen his personal wealth fall by $71 billion this year, according to the Bloomberg Billionaires Index.

Tech is one of the worst performing sectors in the S&P 500 this year, and within that red patch is the smaller subset of what’s known as Metaverse stocks, or tech companies that build virtual worlds for gaming, socializing, and work. Investor Cathie Wood and Goldman Sachs were among those touting the Metaverse as the biggest breakthrough in consumer technology since the launch of the iPhone. They predicted the Metaverse would be worth trillions by the end of the decade.

Zuckerberg changed his company’s name from Facebook to Meta last fall and has made billions of dollars in investments to make his Metaverse vision a reality. But investor appetite for tech companies tackling ambitious, capital-intensive projects has waned as interest rates rise. This has hurt Metaverse stocks of all stripes. Exhibit B: The Metaverse ETF is down 46.7 percent since inception last year. Here are the top five holdings, compared to the S&P 500:

The lousy stock performance isn’t just because of the Metaverse. A slowing global economy, rising energy prices, and the bear market for crypto assets are also weighing on many of these stocks.

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