A Closer Look At Impact Investing

It's a philanthropic organization in an area that we've been covering a little bit more lately, and I just find absolutely fastening impact investing. Maya, thanks so much for joining us. UM talk to us first about the difference between impact investing and e s G investing, Right, UM, so E s G Environmental Social Governance criteria is really it's a

set of standards, right, It's a criteria impact investing. I think of it is really more about an investment thesis for investment strategy, and a good way to think about it is to kind of bring it into the conceptual and just realize that every investment that ever has been made in the history of investing has actually had an impact on the world that could be environmental, could be social,

and that impact could be negative, positive, or neutral. Until recently, though, we just never bothered to notice or take into account in our investment decision making whether that impact was positive, negative, for neutral, and what we as an investor wanted to get out of it. So E s G. I think of it if you think about it on that continuum of negative to positive impact. E s G is really a set of criteria that helps us avoid doing harm, that make sure that the impacts of our investment are

not on the negative side. Impact investing, however, is really a strategy that says, I don't just want to avoid harm, I really want to pursue an investment strategy that is proactively and intentionally prioritizing being on the path to end of that spectrum. My, can you give us an example of maybe a type or an actual investment that you guys made that has been successful for you. Yes, UM, So Open Road Alliance. The primary area of impact investing

that we're engaged in is in debt. So we want a force short term bridge lung fund primarily supporting businesses in the emerging in emerging markets. UM, that's really designed to help businesses that are at an inflection point of growth and scale and for us that we support a variety of impact areas UM, so everything from climate change to healthcare UM to gender, gender equity and human rights UM.

And an example of somebody that we help with our investment thesis around this UM would be in the renewable energy space, where the renewable energy, particularly in emergency markets is of course growing and growing and growing, but they're still subject to the same market inefficiencies UM as the

rest of the market. So, for example, we supported Hubco Power UM when they were entering their series raise and it was a m at the time, the largest series raised for a renewable energy company in East Africa as twenty million dollar raise UM, but they needed five hundred thousand dollars in order to get to close UM and

we provided that five thousand dollar loan. They got to close, they were able to see the massive expansion UM and of course the impact in a company like that is baked in UM just given the nature of what they're doing. And so how do you actually define success for you? Is it returns or is it uh, you know, change, It's both, it's both. So we actually think about certainly the financial terms. We're a lender, and we are, you know, a lender that wants to have the same financial baseline

as other lenders. We want to need to break even, we need to meet it. Are in I r R are open MOAD Impact Fund. We do service third party assets, we have assets of her management, So we certainly have to meet all of those fiduciary responsibilities. But what's different about our investors is, of course they want to go above and beyond that. They're not looking for maximum profits, they are looking for maximum impact in the areas that

where they're investing. So that really is where we're gonna where we go to to look for in terms of you know, what is what is happening because of this investment. How many kilowatts of clean energy are coming online? How many more customers who didn't have access to electricity previously now have access to electricity because of this investment. So my kind of going forward give us a sense of where you think the opportunities are going to be for

impact investing. Where what areas are you guys are going to be looking at. We're gonna be looking in a lot of areas. I do think, you know a game climate is just a really obvious one and a really big one. Um And but I have to say, you know, my sense is really the future. When people asked about the future of impact investing, my first sense is the future of impact investing isn't impact investing, It's just investing.

Because we have learned over the years, and especially in these past couple of years between COVID and inequity and everything that has been happening in our country and around the world, that you know, this traditional system of making investments without being aware of the impact that they're having hasn't really worked out for us. And you know, you only have to look to of course Business round Table and Black Rock and you know, other actors in the

main field. The convergence of impact and investing it's on a collision course. And I don't think that in ten years time there's actually going to be any distinction between what today we're calling impact investing and what is called investing.

It's just all gonna be the same thing. Well, you know, I was talking with a Leam Ramtula from Developing World Market recently and I was thinking the distinction I would make isn't between impact investing in E s G. But really between impact investing and charity, I would rather do impact investing. If I can make a difference in someone's live LIFs and UM, then just donate money. It makes more sense absolutely, And if you're looking at it from the charity and of the perspective, there is a very

clear economic argument to be made. Write a grand charity. It's a guaranteed loss, guaranteed zero percent return. Impact investing from an impact traditional charity perspective has huge leverage building because you automatically have that opportunity to capital for more impact. Hey, Maya, thank you so much for joining us. Maya Winkelstein, CEO of Open Road Alliance, will have more coming up. This

is Bloomberg. Now let's bring in Jason Pride. He is chief investment officer of Private Wealth over Glen me They have forty billion dollars a little more than four any billion dollars of assets under management out of Philadelphia. Jason, thanks so much for joining us. Well to be on with you guys. Let's talk about UM, the peak growth narrative, and it's one that it seems like market participants are convinced about and nonetheless UM they continue for the most

part to bid up stocks. Okay, right now we're down a little bit, but we um continue to bump up against new record highs. What's your view, So we might have a little bit of an opinion here. We think that the peak growth narrative is Look, it's it's in one way it's a fact, and the other way it actually doesn't matter that much to investors. And here's the

reason why. Peak growth comes about from from a realization or a reality that when you're growing up of a low base that that occurred during the previous recession, your growth rate is going to hit levels that you just don't see during the regular portion of the cycle. You hit those peak growth levels, and then one you annualize past that low base, you actually back off from those levels. This happens every single time we are coming out of

a recession. It is a very regular occurring thing and something that actually historically doesn't matter to markets once you get past. And the reason for that is once you settle back down from these these high growth rates coming off the low base, you settle into a sustainable growth rate that ends up being acceptable for investors. All of the past recovery cycles we've been through have seen peak growth.

We've seen the market through move right past peak growth and realize that behind peak growth is an underlying base of growth that ends up being acceptable to them because it ends up being in the middle of an ongoing

economic expansion. We don't expect this period to be any different than that, all right, given that background, Jason, where are you, folks at Glenn Meat, Are you positioning your equity portfolio is more for kind of a reopening cyclical trade or are you, like a lot of folks sticking with those big top line stories, whether it's an Apple or an Amazon or something along those lines. Look, I see it's actually a mix of those those two things. One thing is is we are not in the full

force recovery at this point in time. We are when year past it, we are entering into the kind of like the ongoing expansion period. Having said that, there's a little bit more gas in the tank on on the recovery um. There are portions of their market that are not fully back to previous lowest, portions of the economy that are not fully back to the previous levels. We continue to face the COVID pandemical a little bit, and

that's holding back certain parts of the economy. So we think there's actually a little bit left in the reopening trade. So I would say on the whole we're pretty balanced between the two aspects. Would maybe a little bit of a tilt, a very marginal tilt towards the reopening trade because there's a little bit more left in the in the tank there for us as we go through the

next I would say six to twelve months aread. I think I would also underline that that what seems to be coming out of Washington right now with the the upcoming um UH Infrastructure and Reconciliation Bill, is likely going to be helpful for those more reopen oriented traded industrial cyclicals, domestically oriented companies than the large global multinationals. It seems to be a little bit more punitive to the large global multinationals. On the tech side. How much help do

you expect the industrials, How much fiscal help do you expect? Well, it's a it's a pretty big bill. I think we're looking at mainly from the tech side. Um they peered back some of their expectations on how they're going to be applying the global intangeable income taxes and lifted the expectation for base statutory corporate tax rates, but still the bigger multinational tech players are gonna get harder, hit harder than the more domestically oriented industrial play. And look, it's

an infrastructure spend. At least a good portion of it, seven billion dollars in infrastructure oriented spending is going to be going through and that should benefit UM cyclical industrials more than it does the big tech place. How do you guys think about valuation here in this market, Jason? A lot of folks are saying, you know, even with the ten yield tent tenure yielding in at one point three roughly, boy, this is an expensive market. How concerned are you about that? And we we tend to agree

with that. Even when you adjust for interst rate short term and long term interest rates, equities on a global basis are sitting in like in the eightieth percentile range of valuation. So on the high side, domestic stocks are actually sitting above the nine percentile, with the growth oriented place UM sitting actually closer like seven PERCENTIUL so kind of nosably territoryile and above tends the result in red used for returns over the next one three and five years.

Eightieth percentile does it though, which is pretty interesting. The note and what that what that conveys is actually there's not really everything in the market is overvalued. It's actually more most concentrated those large growth names. When you look at large value, it's more reasonable. When you get down the small it's more reasonable when you look abroad, International, APTA.

It was some of the better areas that we think set out there actually set on in Asia where look they've they've been hit for reasons, but they are the most attractive areas out there in the global marketplace. All right, Jason, thank you so much for your perspective in your comments. Jason pride ce io of Private Wealth for Glenn Mead.

They are based in the town of Brotherly Love. That's Philadelphia, Pa. Well, we always love to talk M and A deals, and there's a big one in the text base and it involves a company that has got a product called mail Chimp into it. It's going to acquire email market and mail Chimp for twelve billion dollars. I don't know where to go with this, but let's start with our leader in all things tech that's on a rag running. He's a Senior Software and I T services animals for Bloomberg

Intelligence on I know into it. Okay, application software company buying some more software. What is a mail Chimp and why is it worth twelve billion dollars? It's a good one, Paul, if you look at it. Everybody in the software space wants to be like Salesforce. They want to go by, go out and buy other software assets so that they can sell in then got installed base. And that's exactly what in chet is doing. Mail Chimp is an email

marketing software company. So you know, if you want to um, you know, send me spam every day about you know, some kind of product that you have. You know, you use one of these software products. I wonder what the name comes from, is it uh? Is there a history of monkeys delivering mail? Or I have no idea, but but hands down, if you think about it right now, how are people reaching out you. Nobody's mailing you pamphlets

and trying to get you to buy some stuff. If you have a large installed base of customers that already use your product, this is the best way for you to you know, sell into another thing that they will buy from you and keep on increasing your recurring revenue from that customer piece, and everybody wants to target the

SNB market right now. So, Matt, I don't know if you know this, but whenever I see an M and A trade go across the Bloomberg terminal, the first thing I do is hit M A go Well, then I go to look at the advisors, what investment banks are working on this deal and for the seller here for mail Chimp, Frank Quatrone and Catalyst still doing big, big deals in tech. Just one of the all time grades in technology investment banking on a rug. So what's really you know, talk to us about into it? Here, here's

the company. I got a hundred and fifty billion dollar market cap. Most people, including me, don't really know much about it. Talk us about this company and kind of where they're growing. Uh, what's behind this company? Since you look at it, I mean, they are the the you know everything tax, turbo tax and then they that's really their bread and potter. But just like it is for

any other even large installed based software company. You know, whether that's a derby, whether that's salesforce, whether that's into it. Right now you have to figure out how can I sell another product? To my customer base. And that really is the game here. You know, a value investor would have said, why don't you just go out and buy your stock every you know, every every year and use the free cast for that. But Salesforce has shown that buying a lot more products it does help in the

long run. It helps in customer retention, your turn rate goes down, and then you can, you know, increase prices when you bundle these things, and that's what the CEO is doing. They bought a company called credit Karma a little while ago for seven billion dollars and this is you know, in the same string of acquisitions. This is a can pick one alright, So what's what's next? Then? I guess is there are they looking for pretty much anything that they can fit into And is finance just

super easy right now? I think finance is super easy right now. And for all of these software companies, what they're looking at is what is their niche and market And for introit it is the SMB market. So whenever you see an economy, uh, you know, rebound, you see the number of small businesses go up, and this is where the sweet spot is for Inteuit. They want to be able to not just do the tax software for

these companies. They want to sell additional products. And now whether this is you know, let's say right now they're using email marketing software. You know, potentially they could think about something in advertising, something in the front office customer service, something in the back office such as finance. So they can they can figure out many areas where a small and medium business would need more software products. You know, Matt, I just pump put up the camp chart, which is

something you like to do for these names. Look at the last five years, boy into it's had a compoundent and your return about forty a year versus the SMP of eight. So it's up another fifty percent this year. So another great software story. That's all I has. All the companies he follows all are up like fifty percent a year every year. Well, it's uh, just a fascinating time for these companies. And um, it kind of reminds me a little bit of those days when Frank Quatrone

was the prince of Silicon Valance. You know, I mean for a lot of our a lot of bankers today probably are too young to remember Frank Quatrone. Um he got embroiled in some real issues just as he was all vindicated. Well yeah, yeah everything, uh huh okay. So definitely a fascinating, a fascinating story of Frank and of into It and Male Champa Rona. Thanks so much for joining us from Bloomberg Intelligence. Apples holding a product event today one pm. Lost ree time, maybe iPhone thirteen upgrade,

maybe a watch upgrade. So my question is do I need to run over to the Apple store on Fifth Avenue and upgrade all my Apple stuff? Joining us is on on Shriny Boston, Senior Semiconductor on Hardware Analysts. He covers Apple for Bloomberg Intelligence, joining us here in the Bloomberg Interactive Broker studio. So Anna, what's is there a big deal today or is this just kind of, you know, some upgrades on the edges. Look, it's going to be evolutionary, right,

So we've said this. There are a billion iPhone users in the install base and the fact that we upgrade about twenty of them every single year is phenomenal. So what you want to do is produce a product that is revolutionary, that drives that refresher great up what we saw with the revolution last with the iPhone twelve was the five G move, and we expect the momentum to continue. We think we're not We're nowhere near done yet with the super Psyche. So this is a this is an

evolutionary story. So the answer to your question is, it would be nice if you went out and upgraded everything as quickly as possible. But we're expecting, you know, fifty one million units in counter quarter three and about eighty nine millions to be sold in counter quarter four. But in the grand scheme of things, this is an evolutionary upgrade, more five G, more momentum, continuation of teams. But the Watch is going to be revolutionary, isn't it? Or at

least the shape is going to be different. It's bigger, um, it should be capable of more? Does it tell time? Look? You know you you bring up a good point, Matt Miller. Is that you brought up the connectivity portion, the halo effect. You know, iPhone drives, Watch, iPhone, drives, Macmac drives, iPhone, everything,

drive services. Right, So the connectivity um or the connectivity between all of these products within the closed the walled garden, if you may, is the wholly grade for Apple to the extent that I can get you upgraded on the watch, which hasn't seen that much of an upgrade UM in recent times. Is a is a great advancement. The fact that services, despite the epic drama, we can make that stickier.

It's a high margin business. We can expand that. That's if I can do that consistently, If I'm Apple every single time, a single product every year or every other year in some cases, and increase the attached rate, that's

what drives iPhone tripments and services grow. You made a second point which was interesting, which not many people are talking about, is the gating factor is supply constraints right UM, and the chip shortage is here to stay, unfortunately, and the visibility of that through be maybe through first half

twenty two. So depending on how strong demand is and where demand comes from and what other products are have high demand, there could be a re percussions even two companies like Apple UM which saw some spill over into iPhone and three Q. Alright, so I'm trying to get Tom Kane to upgrade the five G. I'm trying to ma can download his movies and his music much faster. Is five G really a super cycle driver? I'm just

not feeling it. Yeah, you know, it's interesting because one of the things that unlike remember the two G two three G conversion was voice to data. Right, three G two four G was huge upgrades from a speed perspective from in the four G in the in the data landscape, four G two five G is yes, about more speed, but also about a variety of more connections. It's just not about the handset anymore. It's about handset, it's about autos, it's about industrial IoT, but the services associated with all

of those new expansive products and product categories. We're not there yet, okay, So this is going to be a long journey, and it's come first to the consumer. And at the margin we're going to be able to see faster speech. We are not there with the true millimeter wave implementation of five G either, so all of this is going to take time. Um, we're not seeing any dramatic art poo increases. So you're going to download your movies faster. You're going to be able to stream when

you're on the train in New Jersey transit. That's the answer. Paul. By the way, I remember hearing all this about three G as well. And and now when I see three G on my phone, It's like a nightmare scenario. It doesn't doesn't work anymore. We're we're spoiled, Punch. I can tell you that, you know, the even four G might seem slow compared to a year from now with five. So bottom line on on, I want to go out and get myself a new iPhone. Have been waiting and

waiting and waiting. I want to go and get the new watch the seven series seven Watch? Am I going to be able to do that next week? UM, particularly on the high end? I think you will be able to. UM. One of the things that we've been consistently saying in the last year is that the shipments of Apple, particularly

the iPhone, are gonna skew towards the higher end. All of the camera advancements and the UM lens and enhancements and the screen enhancements are going to drive UM the performance needs and the storage needs of the iPhone UM much much higher. And as a result, you know that seven dollar iPhone is not going to cut it free, Matt, particularly with the pretty pictures of cars that you take. So it's gonna you're gonna move towards a high end

and you're gonna shell out. Well, I actually pay a massive monthly fee in order to get a free the free phone of my choice every year. There you go. So you're already on a good upgrade cadence. Yes, exactly, and I should have upgraded in April. But I knew if I just wait a little bit longer, just a couple more months, I keep telling myself, a couple more months, I can get the thirteen on. Thanks so much for joining us on Trinative aust On there from Bloomberg and

telling thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller y three and on Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio