Wall Street Fighters, Do-Gooders -- And Sting -- Converge in New Jana Fund
January 07 2018 - 04:32PM
Dow Jones News
By David Benoit
A big activist investor is enlisting help from social activists
and rock star Sting to raise billions of dollars and target
companies they think should be better corporate citizens, in a
convergence of Wall Street's roughest fighters and its
do-gooders.
Jana Partners LLC plans to launch a new fund this year dubbed
Jana Impact Capital to invest in companies the hedge fund believes
are good bets but could do better for the world. The fund's board
of advisers includes Sting and others who have a track record of
pressuring companies on environmental, social and governance
issues.
Socially responsible investing, long the territory of smaller
gadflies, has grown in popularity in recent years. The presence of
Jana -- one of the most well-known activists on Wall Street --
boosted by Sting is expected to lend even more legitimacy to the
idea.
Setting the table as it unveils its plans for the fund, Jana has
chosen an eye-catching first endeavor -- the world's biggest stock,
Apple Inc. Jana is partnering with union giant California Teachers'
Retirement System, or Calstrs, to push Apple to address concerns
about teenage iPhone addiction, calling it a potential crisis that
the company needs to respond to in order to protect its
business.
Jana isn't the first fund to pair with a celebrity icon to try
to bring about responsible change. TPG partnered with its own rock
star, U2's Bono, and raised $325 million last summer for its Rise
Fund, with the help of UBS AG's wealth-management unit. In 2004, Al
Gore teamed with David Blood, a former Goldman Sachs Group Inc.
executive, to start Generation Investment Management, which today
manages more than $17 billion.
Most of those funds, and other options like exchange-traded
funds aimed at retail investors, invest in businesses they think
will further positive change, while avoiding industries and
companies they believe are harmful.
Activist investors including Blue Harbour Group LP and Trian
Fund Management LP have recently said they view social and
governance problems as risks to investments, similar to the
position taken by major index funds like BlackRock Inc. and
Vanguard Group.
But the work of actively badgering companies to act better, or
buying into stocks purely to make changes based on social impact,
has historically been outside the mainstream on Wall Street.
Few of Wall Street's big activists have believed that social
improvements alone will actually boost a stock and make them money.
Research on the impact is mixed: Some studies have shown companies
with good social, environmental and governance scores perform
better, but causation remains hotly debated.
Jana believes, with the help of other investors, it can catalyze
socially-conscious changes in companies to create value for
stockholders. Still, it won't seek to charge the kind of high fees
the hedge-fund industry is known for, which usually come with the
chance for outsize returns.
"We still plan on finding good investments, but they will also
be companies that can enhance and protect long-term value by
focusing on the well-being of the public, our economy and our
society, all of which are inextricably linked with long-term
returns," said Charles Penner, a Jana partner involved with the new
fund.
Outside the Impact fund, Jana will continue to do the kind of
activism it is best known for, such as breaking up companies,
pushing for board changes or driving sales. Those types of moves
have long been criticized for helping stocks in the immediate term
at the expense of the future -- one reason the new fund may
surprise some.
The fund's board of advisers will include Sting and his wife,
Trudie Styler, who started the Rainforest Foundation in 1989.
Sister Patricia A. Daly, a nun who successfully fought Exxon Mobil
Corp. over environmental disclosures, and Robert Eccles, an expert
in sustainable investing, are also on board.
Mr. Eccles, who was the first chairman of the nonprofit
Sustainability Accounting Standards Board, which pushes companies
to disclose and discuss plans and potential issues, said his
initial reaction to Jana was surprise.
"This is like counter-intuitive, if not an outright oxymoron,
that an activist hedge fund is going to raise a sustainable
investment fund," he said.
But he quickly came around to Jana's seriousness, he said, and
believes the fund could be a "sea change" for the industry.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
January 07, 2018 16:17 ET (21:17 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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