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Jun 03, 2022

The week in investor relations: Executives ‘buy the dip,’ male applicants question Goldman Sachs’ hiring policies and a tech-risk deep dive

This week’s other IR-related stories that we didn’t cover on

– Corporate executives have been buying shares in their companies at a rate not seen since the early days of the Covid-19 pandemic, according to the Financial Times (paywall), in what the paper said some Wall Street analysts see as an encouraging sign for the US stock market. Between the start of last month and May 24, insider buying at S&P 500 companies has been at its strongest since March 2020, according to figures from VerityData. For the broader Russell 2000 index, there were more insider buyers than sellers this month for the first time since March 2020, VerityData said. This is despite retail investors pulling out of the stock market and the looming threat of a slowdown or recession. ‘Corporate insiders are holding a non-consensus view across most sectors and [are] actively buying the dip,’ analysts at JPMorgan said in a May 27 note, adding that the share purchases were encouraging for the direction of stock markets.

– ‘Goldman Sachs is out there, hiring women,’ said eFinancialcareers. In its People Strategy Report for 2021, released at the end of April 2022, Goldman said 45 percent of its combined analyst and associate hires were female last year. But when it came to campus recruits (recent graduate hires), women joining Goldman Sachs represented 52 percent of the total. This means the firm is already beating its 50 percent target for new female hires at the entry level.

‘Predictably, there are some male candidates who feel peevish about this,’ said the publication, quoting from forums like Wall Street Oasis, which it said are full of young men complaining that diversity targets mean they can’t get jobs in banking as easily as in the past. ‘The disgruntled students are not alone,’ it added, naming a one-time Morgan Stanley and Credit Suisse vice president with a background in asset-backed securities structuring, who it said had been ‘fueling the fire’ with social media posts suggesting that Goldman receives half as many viable applications from women as men and that it’s therefore become twice as easy for women to get in.

– ‘It’s well known that the S&P 500, the most popular index for passive strategies, is dominated by just a few tech juggernauts like Alphabet, Amazon and Facebook, all of which have dropped significantly,’ noted Institutional Investor this week. But a deeper dive by research and data science firm Syntax shows technology risk still makes up 42 percent of the benchmark. ‘That’s only slightly less than the 47 percent technology represented in March 2000 – the peak of the dot-com bubble,’ Institutional Investor said.

Investors generally use more common and less granular measures, added the publication, which now show tech exposure in the S&P 500 hovering at approximately 22 percent – half the figure Syntax came up with. Syntax’s alternative methodology calculates tech exposure using more detailed information on the individual product lines and other services offered by companies. The firm warned investors about their higher-than-expected exposure to tech late last year.

­– The Wall Street Journal (paywall) reported that Unilever said it would add Nelson Peltz to its board. Peltz said Unilever had ‘significant potential’ and that he wanted to work collaboratively with the company. Unilever chair Nils Andersen said the company had held ‘extensive and constructive discussions’ with Peltz and that he believed the investor’s experience in the consumer goods sector would prove valuable. Peltz has previously sat on the boards of Procter & Gamble, Kraft Heinz Co and Mondelēz International.

Unilever said Peltz would be joining the board as a non-executive director and member of its compensation committee, with his appointments expected to be effective from July 20. A joint statement from Peltz and Unilever indicated that the company’s work on sustainability will continue, with the investor saying he wanted to ‘help drive Unilever’s strategy, operations, sustainability and shareholder value for the benefit of all stakeholders.’

– US Senator Elizabeth Warren is planning a bill to crack down on the special purpose acquisition company (Spac) industry after a ‘proliferation’ of bad deals that have often resulted in huge losses for investors, Reuters (paywall) reported. Warren’s bill would increase the legal liability for a range of parties involved in such deals, enhance investor disclosures and lock up for a longer period early investors that bankroll the deals.

Although Warren’s bill may struggle to gain traction this year with lawmakers focused on the mid-term elections, it’s likely to increase pressure on the industry, which is already facing proposed new curbs from the SEC. If finalized, SEC rules proposed in March would largely close loopholes by offering Spac investors protections similar to those they would receive during an IPO. Warren’s bill would build on the SEC’s proposal by codifying its changes into law.

– In related news, the FT reported that Forbes, ‘the media business known for chronicling the fortunes of the ultra-rich’, has abandoned plans to list through a merger with a Spac ‘as investor interest in the market has cooled,’ according to people familiar with the matter. The New York-based media company announced it was going public last August via a Spac based in Hong Kong and founded by a former portfolio manager at Steve Cohen’s hedge fund Point72 Asset Management.

– The WSJ reported that the Frankfurt offices of Deutsche Bank and its asset-management subsidiary DWS Group were raided by authorities over allegations of greenwashing in its mutual funds. Around 50 agents of the city’s public prosecutor’s office, alongside German market regulator BaFin and the federal criminal police office were deployed, a spokesperson for the Frankfurt prosecutor’s office said. The initial suspicion is of investment fraud, the spokesperson said. Regulators have been increasing scrutiny of ESG funds as investors pour cash into the category.

The FT also noted that just hours after the raid, the chief executive of DWS Group resigned. DWS said in a statement on Wednesday morning that Asoka Wöhrmann, chief executive since late 2018, would step down as of June 10, the day after the group’s annual shareholders’ meeting. BaFin launched an investigation into DWS last year, prompted by allegations from former DWS executive Desiree Fixler, who said the company had made misleading statements in its 2020 annual report over claims that more than half the group’s $900 bn assets were invested using ESG criteria. DWS has denied any wrongdoing, but has changed its ESG criteria since Fixler’s revelations.

Reuters reported that Pfizer plans to sell its 32 percent stake in Haleon, its consumer health joint venture with British drugmaker GSK, after the business is spun off as an independently listed company in July. Pfizer previously signaled it would seek to sell its shareholding in Haleon, which is home to Sensodyne toothpaste and Advil painkillers, but GSK said in February that the US drugmaker would retain its stake.

– China and Hong Kong have agreed to add ETFs to the joint Stock Connect scheme, according to The TRADE. Regulators in China and Hong Kong have agreed to include ETFs on mainland and Hong Kong exchanges in Stock Connect, said the publication. It will reportedly now take two months for both sides to prepare for formal implementation, while an official launch date is expected in due course. After including ETFs in Stock Connect, mainland and Hong Kong investors will be able to trade eligible stocks and ETFs listed on each other’s exchanges through local securities firms or brokers.

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...