Business

➚ BUY: Drugs. Eli Lilly shares are up 3% since it announced it was buying a competitor to celebrities’ favorite obesity treatment, Ozempic, and received regulatory approval for just the second drug ever proven to slow Alzheimer’s. (Guess which development moved the stock more.)

➘ SELL: Drugs. Police and tax agents raided New York City’s largest weed chain, the latest setback for an industry whose semi-legal status is spooking investors. Pot companies raised $18 million in the first quarter, according to S&P, compared to $3.8 billion in 2021.

How much more the four big U.S. commercial banks made in net interest — what they earn on loans, minus what they pay on deposits — last quarter, bucking concerns that higher rates would hurt more than they helped.

Wall Street’s anti-woke warrior resets

THE SCOOP

The investment firm founded by anti-woke crusader Vivek Ramaswamy is dialing down the very anti-woke rhetoric that made it prominent, hoping to court a wider audience, the firm acknowledged to investors in a letter last month.

The firm, Strive Asset Management, is seen “as political over investment oriented,” turning off some investors and limiting its opportunities to grow, according to the letter, viewed by Semafor.

Now, even as Ramaswamy is riding his culture-war views to a surprising third on the presidential campaign trail, Strive is recalibrating its own outrage meter.

Its new chief executive, Matt Cole, spent 16 years running bond portfolios for CalPERS, the giant California pension fund. A deeply religious Christian but not outwardly political, Cole, who took the job in May, said ESG has outlived its usefulness in investing.

“Don’t get me wrong. We believe that shareholders are more important than other stakeholders,” he said in an interview. “And we do think the corporate ESG movement has been value-destructive and politically motivated. It started with ‘don’t hire slave labor in China’ and now it’s become something else.

But “that’s an investing [disagreement], not a culture war,” he said.

Cole pointed to Strive’s largest fund, which invests in U.S. energy companies and urges them to keep drilling for oil so long as it’s profitable. He cited estimates from JPMorgan analysts of a $600 billion shortfall in oil and gas investment by 2030, which could lead to a spike in prices and crimp the global post-pandemic recovery.

“In 20 years, I highly doubt that Strive’s position would be oil companies should be drilling more,” he said, “but that’s true today.”

Strive runs eight exchange-traded funds, none of which would be out of place in a typical investment portfolio. Recent launches include a small-cap stock fund and a growth fund heavy on big tech names.

It has $845 million in assets — hardly a threat to the giants, like BlackRock and State Street, that Ramaswamy set out to unseat, but significant for a new manager with no track record. (JPMorgan, which got into the ETF business in 2014, took two years to raise its first $1 billion.)

Strive eventually plans to raise a private, activist fund to run proxy fights and seek corporate influence, but that’s on the back burner, people familiar with the matter said. First up is something more mundane: bond funds.

LIZ’S VIEW

Both sides in the red-versus-blue investing world are dialing down the rhetoric.

BlackRock’s Larry Fink won’t use the term ESG anymore, which he says has been “weaponized” by both the far left and the far right. BlackRock dropped the term from its proxy-voting guidelines this year, and yesterday added the CEO of Saudi Aramco, the world’s largest oil company, to its board.

And pension managers are pushing back against political mandates to invest in, or get out of, certain stocks. Vermont recently passed a law requiring its pension funds, which are already underfunded, to divest from fossil fuels, over the strong objections of the people doing the investing.

Similar efforts on the right have failed in Kentucky and North Dakota. An Arkansas bill penalizing asset managers and banks that shun oil companies was tailored to exempt situations that would cause “a negative financial impact to the state.”

Even in deep-blue California, a law requiring the state’s massive pensions to sell their fossil-fuel investments by 2027 passed the Senate but was quietly shelved by the state assembly.

While Strive has fundraised successfully from red-state officials — it got $100 million investment from Texas’ $34 billion state employee retirement plan earlier this year, documents show — Cole sees the limits to nakedly political fundraising.

The firm’s priorities, according to the letter viewed by Semafor, would match those of any startup firm: launch new funds, sell them directly to retail investors, court family offices, get into the 401(k) business.

The move will shift the firm further away from the vision Ramaswamy and his co-founder, Anson Frericks, sketched out two years ago. The original idea, a person familiar with the matter said, was a venture firm that would seed right-wing corporate alternatives, like a conservative beer company (Frericks is a former AB InBev executive) and a rival software to Salesforce, whose CEO, Marc Benioff, had become an outspoken supporter of LBGTQ rights.

For the Room for Disagreement and the rest of the story, read here.

China’s post-pandemic economic recovery is sputtering. Beijing said Monday that GDP grew just 0.8% in the second quarter, and more than one in five workers under 25 are unemployed, a record.

Exports fell the most since February 2020, leaving China increasingly isolated. Of its largest trading partners, only Russia is importing more from the mainland than it was a year ago.

A real-estate hangover has been weighing on the economy, too. China has too many houses, concentrated in places with too few jobs.

Beijing is responding with stimulus. Banks are paying savers the lowest interest since the 1990s, hoping they’ll spend instead. State-owned companies have vowed to create 1 million jobs for college graduates, and the military is favoring those with degrees, too.

China’s massive population has always been its economic moat. But as India is about to overtake it as the world’s most populous nation, its richest citizens are leaving in droves, and its workforce is rapidly aging. The Economist pointed to 1980s Japan as a cautionary tale.

Tesla board members will return $735 million to the company (minus lawyer fees) to settle shareholder claims that they overpaid themselves. It’s the largest settlement of such a case in Delaware history, says Kevin LaCroix, who runs a blog on Delaware litigation. A separate lawsuit over a record-setting pay package for Elon Musk is still live.

Angelo Mozilo, who became the permanently tanned face of the 2008 crash as CEO of subprime lender Countrywide, died Sunday at 84, his son confirmed to Bloomberg. He started Countrywide in 1969 with $25,000 in savings and built it into the largest U.S. mortgage lender on a single idea: that people who didn’t qualify for traditional mortgages should have one anyway.

Subprime loans — offered to borrowers with poor credit scores, little income, or both — ushered in a record boom in home ownership but sparked a global recession when they went bad. First on Time’s list of “25 People to Blame” for the crisis, Mozilo sold a crumbling Countrywide to Bank of America in 2008 and later defended his $120 million pay package in front of Congress.

“He helped enable the American dream for middle-income earners,” Anthony Scaramucci told Liz of his longtime friend. “I think he understood the criticism, but he thought some of it was unwarranted. It was too much of a pile-on.”

A story last week said that Goldman Sachs had lost the M&A crown to JPMorgan for the first half of the year. That was indeed true as of Refinitiv’s June 29 data, which had Goldman $7 billion behind, with $1.3 trillion of announced deals. By June 30, it was $4 billion ahead with an extra $30 billion of deals announced.

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