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A fresh fund has been established with a mission to target what they refer to as “woke” companies, and their first contender is Starbucks. This move comes as a section of investors, driven by political motives, aim to leverage Donald Trump’s election victory.
Azoria Partners, planning to roll out this actively managed fund early next year, intends to exclude S&P 500 firms that integrate diversity, equity, and inclusion (DEI) into their hiring frameworks.
The spotlight shifted to this initiative on Thursday at Trump’s Mar-a-Lago resort in Florida. Invitations suggested Cathie Wood and Kevin Roberts, known for crafting the Project 2025 blueprint for Trump’s administration, were among the attendees. However, they remained unavailable for comments despite requests.
“In America, regardless of one’s political stance, there’s little appetite for investing in companies operating under what are seen as ‘woke’ initiatives,” commented James Fishback, a founding force behind Azoria, in a dialogue about exclusionary hiring practices impacting shareholder value. “Our focus is on shareholder interests, and human capital hiring quotas compromise that,” he added.
Starbucks, which enjoys a market valuation of approximately $110 billion, countered in a statement to the Financial Times, asserting it has no “targets or quotas at any point in our hiring process.” They described diversity goals cited by Azoria, like achieving at least 30% racial and ethnic diversity among corporate employees, as non-binding goals that have since lapsed.
This emerging fund is another chapter in the ongoing narrative where Trump-aligned investors challenge DEI principles and broader ESG (Environmental, Social, Governance) initiatives by large U.S. corporations, seeking to benefit from anticipated governmental shifts in the U.S. capital.
Although Starbucks, with its sprawling network of 40,000 coffee shops worldwide, has trailed the market this year, its shares are rallying since August on optimism surrounding newly named CEO Brian Niccol, who is perceived as a catalyst for revitalizing the company.
The new fund labeled as “anti-woke,” crafted by Fishback alongside Azoria co-founder Asaf Abramovich, has outlined roughly 36 other companies on its no-go list if they continue to uphold DEI policies.
Roberts, heading the Heritage Foundation think-tank, and Wood, the brain behind Ark Investment Management, were lined up to present their views at Trump’s Florida estate on Thursday.
Despite not managing any capital yet, Fishback’s fund lacks the financial muscle to compel changes at Starbucks. In stark contrast, Elliott Management, an influential activist fund, recently took a significant position in Starbucks, prompting a shift in its CEO earlier this year.
In contrast with activist hedge funds that typically acquire company stakes to instigate change, Azoria aims to influence by deliberately excluding certain companies from its index, arguing DEI strategies negatively impact stock values.
Azoria’s tactic takes a page from the playbook of ESG-centric funds that avoid investing in environmentally damaging industries, which have been a talking point among conservatives.
Azoria’s new ETF, slated for launch early next year, will trade under the ticker SPXM, which stands for S&P Meritocracy. At the Mar-a-Lago rollout, Fishback claimed that S&P 500 firms factoring in diversity lagged behind their peers in performance. However, research tells a different story; for instance, a McKinsey study from last year indicated firms in the highest racial diversity quartile were 39% more prone to outperform those in the lowest.
Fishback, formerly affiliated with Greenlight Capital and currently embroiled in a legal tussle with its founder David Einhorn, is among the Wall Street figures banking on a conservative wave as Trump eyes a return to the White House.
Elsewhere, politically fueled investors have punched above their weight. Engine No. 1, an activist investor, secured a trio of board seats at ExxonMobil in 2021 with a campaign that opposed the oil titan, managing assets under $240 million.
Fishback asserted that hiring based on ethnic and racial diversity is a politically charged maneuver detrimental to shareholder value.
He put it bluntly: “Quit the nonsense. Hire the best talent without apologies, maximize earnings, satisfy shareholders, and stick to what’s right.”
Contributions to this report have also been made by Gregory Meyer and Antoine Gara, reporting from New York.
