Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
A new fund aimed at punishing “woke” companies will make Starbucks its first target as politically motivated investors seek to capitalize on the election of President Donald Trump.
The actively managed fund, which Azoria Partners plans to launch early next year, will exclude S&P 500 companies that consider diversity, equity and inclusion in the hiring process.
The foundation announced plans for a Starbucks on Thursday at Trump’s Mar-a-Lago resort in Florida.
The event was scheduled to be attended by Cathie Wood and Kevin Roberts, the ideologue behind the Trump administration’s Project 2025 blueprint, according to an invitation seen by the FT. Mr. Wood and Mr. Roberts did not respond to requests for comment.
“Regardless of whether they voted for President Trump or not, Americans don’t want to invest in companies that are conducting woke science experiments,” James Fishback, one of the founders of Azoria, said in an interview. He mentioned employment practices that take into account the “We represent shareholders here, and human capital employment quotas hurt all shareholders.”
The coffee chain, which has a market capitalization of about $110 billion, denied in a statement to the Financial Times that it had “goals and quotas at every stage of the hiring process.” The chain said the policies cited by Azoria, such as achieving at least 30% racial and ethnic diversity in the company’s workforce, are aspirations, not quotas, and that they recently expired and have not been reinstated. Ta.
The new fund is the latest effort by pro-Trump investors to push back on DEI, environmental, social and governance initiatives by major U.S. companies and profit from the upcoming change in Washington.
Shares of Starbucks, which operates about 40,000 coffee shops around the world, have lagged the broader market this year, as newly appointed CEO Brian Nicol has struggled. It has been rising since August due to expectations that the current management will be reorganized.
A new “anti-woke” fund created by Fischbach and his Azoria co-founder Asaf Abramovich has a list of about 30 other companies it will remove from its roster unless they repeal their DEI policies.
Roberts, president of the Heritage Foundation think tank, and Wood, founder of Ark Investment Management, were scheduled to speak at an event at Trump’s resort on Thursday.
Mr. Fishbach’s foundation does not yet control the money, meaning the Starbucks campaign does not have enough financial clout to influence the retailer’s decisions. Powerful activist fund Elliott Management recently acquired a large stake in the chain, spurring a CEO change earlier this year.
Unlike activist hedge funds that buy stocks in companies to agitate for change, Azoria advances its objectives by removing companies from indexes and publicly claiming that DEI policies are negatively impacting stock prices. Probably.
The strategy borrows from the so-called Environmental, Social and Governance Fund, which excludes investments in polluting industries and has been attacked by many conservatives.
Azoria’s new ETF is expected to launch early next year under the ticker SPXM, which stands for S&P Meritocracy. Speaking at a Mar-a-Lago event, Fishbach argued that S&P 500 companies that consider diversity in their hiring practices are underperforming their competitors.
A McKinsey report last year found that companies in the top quartile of racial diversity were 39 percent more likely to outperform those in the bottom quartile. Yes, there are studies to the contrary.
Mr. Fischbach previously worked at hedge fund Greenlight Capital, which is embroiled in a legal dispute with its founder David Einhorn, but has benefited from a conservative shift with President Trump’s return to the White House. He is one of the Wall Street investors looking to make a profit.
Other politically driven investors have also punched well above their weight. Activist investor Engine Number One has waged a campaign against the oil major, securing three seats on ExxonMobil’s board of directors in 2021, while overseeing $240 million worth of assets.
Fischbach argued that hiring based on ethnic or racial diversity is a political act that harms shareholders.
he said: “Stop that crap. Hire the best and brightest people. Make no apologies for it, make money, give it to shareholders, do the right thing.”
Additional reporting by Gregory Meyer and Antoine Gara in New York
