Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>On 23 November, the International Organization of Securities Commissions (IOSCO) released a framework aimed at greater oversight and accountability of ESG ratings and data providers.</li>
<li>Generally, this is a positive for ESG investing. Implications for specific stocks, however, are still vague and depend on how regional regulators interpret and implement IOSCO's suggestions.</li>
<li>That said, one of IOSCO's concerns – conflicts of interest – could affect certain ESG ratings and data providers, especially those owned by the "Big Three" credit rating agencies.</li>
</ul>


On 23 November, the International Organization of Securities Commissions (IOSCO) released a framework aimed at greater oversight and accountability of ESG ratings and data providers.
Generally, this is a positive for ESG investing. Implications for specific stocks, however, are still vague and depend on how regional regulators interpret and implement IOSCO's suggestions.
That said, one of IOSCO's concerns – conflicts of interest – could affect certain ESG ratings and data providers, especially those owned by the "Big Three" credit rating agencies.


ESG Ratings and Data Providers Subject to Greater Oversight Under IOSCO Framework

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Market dynamics remain healthy which suggests a new broad-based bull market is not far off. With that said, we are still waiting for confirmation in the form of breakouts or bullish price inflections on the broad global indexes (ACWI-US, ACWX-US, EFA-US, and EEM-US) in order to turn bullish.<ul type="disc">
<li>
Actionable Theme: Major Autos/Auto Parts. Global automobile stocks display bullish price and RS inflections with many breaking out to new highs -- add exposure... see pages 3 and 5-6.</li>
<li>
Actionable Theme: Financials. There continues to be a plethora of attractive Financial stocks globally, ranging from banks and insurance to financial services -- add exposure... see pages 4 and 6-14.</li>
</ul>

Market dynamics remain healthy which suggests a new broad-based bull market is not far off. With that said, we are still waiting for confirmation in the form of breakouts or bullish price inflections on the broad global indexes (ACWI-US, ACWX-US, EFA-US, and EEM-US) in order to turn bullish.

Actionable Theme: Major Autos/Auto Parts. Global automobile stocks display bullish price and RS inflections with many breaking out to new highs -- add exposure... see pages 3 and 5-6.

Actionable Theme: Financials. There continues to be a plethora of attractive Financial stocks globally, ranging from banks and insurance to financial services -- add exposure... see pages 4 and 6-14.


Buying Global Financials & Autos/Auto Parts

Two days ago the U.K. Financial Reporting Council announced 125 successful signatories (aka "not greenwashers") to the revised U.K. Stewardship Code. Signatories are integrating stewardship and ESG (Environmental, Social, Governance) factors into investment decisions, to high standards.Whilst this is ostensibly limited to U.K. pension assets, ramifications are more far-reaching than it might at first appear (one indication is the number of North American and Asia Pacific signatories, in addition to the expected European names). More specifically, the broad relevance is because it:<ul>
<li>Affects firms doing business with U.K. asset managers/owners not just the managers/owners.</li>
<li>Is a quasi-blueprint for similar anti-greenwashing initiatives taking root in the U.S. and Asia.</li>
<li>Greenwashing is having an increasing impact on stocks prices (e.g., DWS Group last month).</li>
</ul>This is one battle in an emerging global war on greenwashing. The U.S. SEC has its own agenda to fight greenwashing and Asia isn't far behind (e.g., regulators in Japan stepping up scrutiny). There is more to come, and a lot to learn from this including who is (and is not) on the signatory list.

Two days ago the U.K. Financial Reporting Council announced 125 successful signatories (aka "not greenwashers") to the revised U.K. Stewardship Code. Signatories are integrating stewardship and ESG (Environmental, Social, Governance) factors into investment decisions, to high standards.Whilst this is ostensibly limited to U.K. pension assets, ramifications are more far-reaching than it might at first appear (one indication is the number of North American and Asia Pacific signatories, in addition to the expected European names). More specifically, the broad relevance is because it:
Affects firms doing business with U.K. asset managers/owners not just the managers/owners.
Is a quasi-blueprint for similar anti-greenwashing initiatives taking root in the U.S. and Asia.
Greenwashing is having an increasing impact on stocks prices (e.g., DWS Group last month).
This is one battle in an emerging global war on greenwashing. The U.S. SEC has its own agenda to fight greenwashing and Asia isn't far behind (e.g., regulators in Japan stepping up scrutiny). There is more to come, and a lot to learn from this including who is (and is not) on the signatory list.

The War on Greenwashing: UK Stewardship Code "Successful Signatories" Has Broader Implications

Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

Bloomberg reported that <a href="https://www.smartkarma.com/entities/nikola-corp" target="_blank" data-smartkarma-citation="entities:29029:1" rel="noopener">Nikola Corp (NKLA US)</a> ex CEO Trevor Milton has <a href="https://www.bloomberg.com/news/articles/2021-08-06/nikola-s-milton-turns-to-lawyers-who-defended-tesla-s-musk?sref=Q1XEaVVD" target="_blank" rel="noopener">hired the s</a><a href="https://www.bloomberg.com/news/articles/2021-08-06/nikola-s-milton-turns-to-lawyers-who-defended-tesla-s-musk?sref=Q1XEaVVD" target="_blank" rel="noopener">ame lawyers</a> who defended <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> CEO Elon Musk in his securities fraud conviction in 2018.He might also consider Jay Clayton.Few lawyers have been more helpful to Elon Musk than ex SEC chair Jay Clayton, given his astonishing leniency with Elon over his fake buyout of Tesla which cost investors $20 billion in evaporated market cap.

Bloomberg reported that Nikola Corp (NKLA US) ex CEO Trevor Milton has hired the same lawyers who defended Tesla Motors (TSLA US) CEO Elon Musk in his securities fraud conviction in 2018.He might also consider Jay Clayton.Few lawyers have been more helpful to Elon Musk than ex SEC chair Jay Clayton, given his astonishing leniency with Elon over his fake buyout of Tesla which cost investors $20 billion in evaporated market cap.

Nikola's Milton Just Hired Elon's Lawyers

<a href="https://www.smartkarma.com/entities/nikola-corp" target="_blank" data-smartkarma-citation="entities:29029:1" rel="noopener">Nikola Corp (NKLA US)</a> ousted <a href="https://www.bloomberg.com/news/articles/2021-07-29/nikola-founder-charged-for-allegedly-misleading-investors?sref=Q1XEaVVD" target="_blank" rel="noopener">founder/CEO Trevor Milton was charged in federal court today with criminal and civil fraud</a> for lying to investors for years about “nearly every aspect of the business” to juice the stock price.This comes just two weeks after <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> CEO Elon Musk defended himself in court over his role in <a href="https://www.bloomberg.com/news/articles/2021-07-13/musk-keeps-temper-in-check-in-tesla-solarcity-trial-testimony?sref=Q1XEaVVD" target="_blank" rel="noopener">pushing Tesla in 2016 to buy SolarCity</a> for an insupportable $2 billion without revealing its near-bankruptcy distress in order to bail out his relatives who ran it. Tesla already paid $60 million last year to settle the case, but Musk, true to form, stubbornly resists any efforts to hold him accountable for just about anything, no matter the harm.It could cost him $2 billion to refund the purchase price for SolarCity if he loses, and the Tesla shareholders suing have a credible case, but Musk is used to getting off without serious consequences.After all, he has defied courts, federal regulators, police, state and local government authorities for years with little more than a slap on the wrist.But this year things have changed, whether Elon Musk realizes it yet or not.

Nikola Corp (NKLA US) ousted founder/CEO Trevor Milton was charged in federal court today with criminal and civil fraud for lying to investors for years about “nearly every aspect of the business” to juice the stock price.This comes just two weeks after Tesla Motors (TSLA US) CEO Elon Musk defended himself in court over his role in pushing Tesla in 2016 to buy SolarCity for an insupportable $2 billion without revealing its near-bankruptcy distress in order to bail out his relatives who ran it. Tesla already paid $60 million last year to settle the case, but Musk, true to form, stubbornly resists any efforts to hold him accountable for just about anything, no matter the harm.It could cost him $2 billion to refund the purchase price for SolarCity if he loses, and the Tesla shareholders suing have a credible case, but Musk is used to getting off without serious consequences.After all, he has defied courts, federal regulators, police, state and local government authorities for years with little more than a slap on the wrist.But this year things have changed, whether Elon Musk realizes it yet or not.

Nikola's Ex CEO Trevor Milton Arrested for Lying to Investors. Some Ask, "What About Elon?"

Switzerland

UBS Group AG provides financial services to private, corporate, and institutional clients. The Company offers investment, retail, and corporate and institutional banking, as well as holistic wealth management planning and asset management services. UBS Group also offers securities services such as fund administration and third-party fund management.

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UBS Group (UBSG SW)

ESG Ratings and Data Providers Subject to Greater Oversight Under IOSCO Framework

ESG ratings and data are largely unregulated, despite growing relevance to capital markets. That is why IOSCO decided it is time for greater...

Kyle Rudden

Buying Global Financials & Autos/Auto Parts

Global automobile stocks display bullish price and RS inflections with many breaking out to new highs. Financials are attractive globally, ranging...

Vermilion Research

The War on Greenwashing: UK Stewardship Code "Successful Signatories" Has Broader Implications

Telegraph from European front in global war on greenwashing. U.K. names stewardship victors ("not greenwashers"). Many notable casualties. Anti...

Kyle Rudden

Nikola's Milton Just Hired Elon's Lawyers

Nikola's Trevor Milton has hired the same lawyers who defended Elon Musk in his securities fraud conviction in 2018. He might also consider ex SEC...

Vicki Bryan

Nikola's Ex CEO Trevor Milton Arrested for Lying to Investors. Some Ask, "What About Elon?"

Many of Milton's lies are very different vs tales Tesla CEO Elon Musk has told investors for years. Others seem troublingly similar. With new...

Vicki Bryan

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