Jeff Ubben Leaves ValueAct: First Mover in 'Cleaning Asset Management' or a Legacy Planning Maneuver?
Jeff Ubben, one of the very few successful, large-scale, old-school value investors left his hedge fund ValueAct. In his yet-to-be-publishedFTinterview, he said:
1. Companies have used cheap debt to acquire each other.
2. Buybacks have corrupted the system (paraphrase to - they have bought all their shares back).
3. There are three players in every industry.
4. There's nothing there.
(References: Search for " Jeff Ubben leaves ValueAct for social investing venture, calls finance 'done' " on YouTube.)
Here are the questions I have:
1. Does this look like the beginning of a long-due systemic change in capitalism or is it just legacy planning for him?
His move is bold, and so are his statements. But this comes after twenty years of having rocked in the system he's blaming. Sure, people change, but the timing invites skepticism. He's 58, maybe he wants to change things in the next 30 years and leave a Gates-like story behind.
Is it really the time to discard ESG and bring in a more objective and situation-adaptive framework for socially conscious investing?
I agree with the central thesis in ESG - invest in companies that do good things, and you will make money. But the way ESG is practiced in most spaces - it really doesn't sound like much. If it was really that functional, every fund would have pounced on it. ESG is more like an IR tool than an investment framework. Do you expect this guy to come up with some way to actually bring institutional investorssome considerable alphawhile backing the companies that bring net-positive to maximum people?Do you think you can run a profitable fund while having a tangible and clearly spelled out thesis for the greater good that is more than a marketing gimmick?
It makes logical sense. You run a company that makes 'lives better' and make profits. But, time and again, the companies that killed it were also the ones that killed the 'do-gooder spirit'. Facebook for phone addictions, Coke for sugary drinks, McDonald's for unhealthy food, pharma guys in the opioid crisis, Nike for child-labor abuse, O&G companies for - you know what.
To answer my question - I really don't think so. I am making a transition to Renewable Energy because I think as the cost of producing it goes down in countries like India where power demand is strongly growing, there will be a lot to be made in the industry. But beyond that, unless I knew exactly where was the opportunity to do good profitably, I am not sure whether I can systematically run a fund that serves do-good needs and investor profits.
As always - sorry for the length, open to get corrected.
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