ESGs: The Most Profitable Investment strategy??

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Like so many others I've been SO OVERWHELMED by the amount of stock symbols, tips, dips, DDs, puts, calls, highs, lows etc this month!! Learning about stocks is def not easy!

I saw a few questions from folks about how to get started because there are as many stocks as there are stars in the sky. You can't chase them all!

I was doing research on random clean energy companies today and saw the term "ESG" pop-up several times. Little did I know it, I was already starting to strategize a highly profitable ESG portfolio without even knowing what ESG was. If you are new to investing and are looking towards the future, maybe you should start by building an ESG portfolio!

I would like to use this thread/share resources/tips about stocks that are ESG.

What is ESG investing??? Here's a great article:

What Is ESG Investing?
John Rotonti
Updated: Oct. 5, 2020, 5:45 p.m.

There are a variety of different investing philosophies within the responsible investing realm. One method you may have been hearing about more and more is ESG investing.

"ESG" stands for environmental, social, and governance. Investors who employ this strategy examine criteria within these three categories to analyze stocks. Combining the ESG lens with more traditional stock analysis techniques is known as ESG integration. Anyone can join the swelling ranks of ESG investors by simply learning more and then using this framework in making future investing decisions.

It's no wonder ESG investing is gaining traction. Research is increasingly showing that this investing method can reduce portfolio risk, generate competitive investment returns, and help investors feel good about the stocks they own.

more here.....

What an ESG stock might look like:


1*CljYuvnSf05u7HflRvzdAQ.png



I think people view ESG investing as "meme-stock" investing in that its emotional investing. But in this case, utilizing your optimism for the future can actually help you make stronger and more profitable stock picks for your portfolio! There is nothing wrong with emotion in investing because sometimes you sit with a stock for 6 months or more! That's a longer than some relationships lol so why not put your money behind something you believe in???


I will be posting a list of what I think are the best ESG stocks and if y'all come across any feel free to post! They can be any stocks including penny stocks/OTC.

If you feel like sharing what ESG stocks you have or if you have a similar investment strategy, share as well!!


edit:
**I am not providing financial advice and I'm not a financial blah blah***

 
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Top 10 ESG Stocks Al Gore’s $25 Billion Hedge Fund Is Buying
Siraj Sarwar
December 22, 2020·8 min read

In this article, we presented the top 10 ESG stocks Al Gore's $25 billion hedge fund is buying. Click to skip ahead and see Top 5 ESG Stocks Al Gore's $25 Billion Hedge Fund Is Buying.

Former U.S. Vice President and Generation Investment Management co-founder Al Gore, 72, has outperformed the broader market trends despite its sustainable investing strategy, which he describes as “improving quality of life without borrowing from the future”.

Al Gore’s sustainability-focused hedge fund has been investing billions of dollars in ESG stocks in a fight against climate change. Former US vice president has won a Nobel Peace Prize for his climate change activism, while his book 'Inconvenient Truth' and documentary also bagged Oscars.

“When we started Generation our mission was to prove the business case that the full integration of sustainability into investments need not sacrifice returns. Everybody knows that the market is a wild and unruly beast, and you have to do the best you can. We’re very proud of what we’ve been able to do thus far, but we are not blind to the statistical realities of investing,” Al Gore said.

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Top 10 ESG Stocks To Buy Now According To Al Gore
A sustainability-focused firm has generated massive returns in the last fourteen years. Generation Investment returned 12.14% per year in its first ten years of operations. Its returns stood around 17% from 2015 to 2017.

Fiscal 2018 was also a solid year for Generation Investment Management as its 13F portfolio's value soared from $10.32 billion at the end of 2017 to $11.92 billion by the end of 2018. Moreover, the hedge fund saw massive increases in the value of its 13F portfolio in the last two years. The firm ended fiscal 2019 with a portfolio value of $15.64 billion while the market value of Al Gore’s 13F portfolio hovers above $19 billion at the end of the third quarter of 2020. You need to keep in mind that 13F portfolio lists the value of a hedge fund's holdings in the securities of publicly traded US companies. Al Gore's hedge fund is potentially investing in foreign stocks and securities which is why its assets under management (AUM) stands at $25 billion.

ESG stands for environmental, social, and governance. Some investors like Al Gore are seeking to invest in companies that manage their influence on the environment and society at large. Although Mr. Gore is among the pioneers of ESG investing, ESG stocks gained traction since the 2015 Paris Climate Agreement.

“Despite all the lockdowns that we’ve had this year, we’re still on track for a world that is going to be too warm to sustain life as we know it, according to climate science,” Linda-Eling Lee, who is the global head of research for MSCI’s ESG Research group said. “You’re going to see lots more investors really shifting capital towards less carbon-intensive assets.”

Lee also pointed to the performance of some of the top-rated ESG-based ETF’s including more than 22% gains from Vanguard’s ESG U.S. Stock ETF (ESGV), which is second-largest by assets.

While Al Gore's reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 78 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

It’s worth considering to make an ESG based stock portfolio to make profits from investments along with contributing to environmental, social, and governance values. However, if you don’t have an idea about how to select stocks for sustainable investing, you can simply copy Al Gore's hedge fund portfolio. Let’s start a countdown on the top 10 ESG stocks Al Gore's hedge fund is buying:

10. The Cooper Companies, Inc. (NYSE:COO)
A medical device developer, the Cooper Companies (NYSE: COO) is the tenth-largest stock holding of Generation Investment Management, according to the latest filings. The sustainable investing themed hedge fund first initiated a position in a medical device developer during the second quarter of 2016.

The firm has raised its stake in Cooper Companies by 12% in the September quarter this year to 2.2 million shares. Shares of the Cooper Companies rose 157% in the past five years. The company does not offer dividends amid its strategy of reinvesting profits back into the business. Several other hedge funds are bullish on a medical device developer. According to Insider Monkey data, the Cooper Companies was in 34 hedge funds’ portfolios at the end of June while the previous all-time high was 31.

9. Palo Alto Networks, Inc. (NYSE: PANW)
The cybersecurity platform Palo Alto Networks, Inc. (NYSE: PANW) is one of the best ESG stocks to invest in according to A1 Gore. The hedge fund has slashed 5% of its stake in PANW in the third quarter. Despite that, the cybersecurity platform accounts for 4.09% of the portfolio valued at $770 million. Shares of Palo Alto Networks rallied more than 50% this year, extending the five years gains to almost 100%.

Palo Alto Networks Inc was in 59 hedge funds’ portfolios at the end of the third quarter of 2020 compared to the previous all-time high of 52. Here’s what RiverPark Advisors stated in the shareholders' letter:

“Palo Alto is a leader in the large and growing $19 billion in IT infrastructure security market. The company benefits from two secular trends – the migration to the cloud and the transition to SaaS models. Formerly a hardware-based solutions company, PANW now also offers software solutions independent of its hardware, allowing customers to use them on internal cloud deployments as well as on the large public cloud providers like Amazon, Google, and Microsoft.”

8. Henry Schein, Inc. (NASDAQ: HSIC)
The medical equipment provider Henry Schein (NASDAQ: HSIC) is one of A1 Gore's favorite ESG stocks. The sustainable investing fund manager first initiated a position in Henry Schein's early this year and the firm added to its existing stake in the third quarter. It is the eighth largest stock holding of Generation Investment Management’s equity stock portfolio.

Shares of Henry Schein underperformed this year due to pandemic related problems. Its internal sales grew 13% year over year in the September quarter.

7. Alphabet, Inc. (NASDAQ: GOOG)
The online media stock Alphabet, Inc. (NASDAQ: GOOG) is the seventh-largest stock holding of Al Gore's sustainable investing portfolio. It first initiated a position in Alphabet in 2018. The firm, however, sold 39% of its stake in the latest quarter to capitalize on share price gains. Shares of Google soared 134% in the past five years.

Several other analysts are bullish on Alphabet. Here’s what Baron Opportunity Fund stated in a shareholders letter:

“Considering solid Fund inflows, we added to long-term holding Alphabet Inc. to maintain its weighting in the portfolio. Alphabet is the parent company of Google, the world’s largest search and online advertising company. We increased our position in Alphabet this quarter as a protracted COVID-19-related recovery in travel and brand advertising presented an attractive buying opportunity. We are encouraged by improving trends in both search and YouTube, driven by durable tailwinds to e-commerce and local advertising, as well as the continued shift of video advertising dollars away from linear television as consumers increasingly cut the cable TV cord.”

6. TE Connectivity Ltd. (NYSE: TEL)
The manufacturer of connectivity and sensor solutions TE Connectivity Ltd. (NYSE: TEL) is a long-running investment of Generation Investment Management. The firm has been holding TE Connectivity shares since 2018. It is the sixth-largest ESG stock Al Gore likes the most. The shares of TE Connectivity grew more than 20% in the last twelve months, extending the five years gains to almost 90%.

On top of share price gains, Al Gore's stock portfolio has also been bagging big dividends from the connectivity and sensor solutions company. TE Connectivity has raised dividends in the past seven straight years.
 
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This is an interesting strategy, and it makes the task of researching and selecting stock less daunting because I can quickly categorize a stock based on this approach. Thank you!
 
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I get the E and the G, the Sustainability seems like such a wide category. Ageism? Diversity and Gender?

But I love this category and I'm excited to explore it! Thanks OP!
 
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Biden Administration Will Reverse the Department of Labor’s Ruling on ESG Funds, Analysts Say




By
Lewis Braham
Jan. 31, 2021 7:00 am ET
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U.S. President Joe Biden signs executive actions in the Oval Office of the White House on January 28, 2021 in Washington, DC.
Doug Mills-Pool/Getty Images
The Biden administration will start walking back a controversial Department of Labor rule that would curb the use of ESG, or environmental, social, and governance, funds in 401(k) retirement plans, though it may take as long as 18 months to undo it completely, analysts tell Barron’s.

In November, the DOL finalized a rule that made incorporating ESG funds in retirement plans more difficult. The rule, which took effect Jan. 12, requires plan sponsors and other fiduciaries selecting ESG funds “to separate the legitimate use of risk-return factors from inappropriate investments that sacrifice investment return, increase costs, or assume additional investment risk to promote non-pecuniary benefits or objectives.” The final rule doesn’t contain specific references to ESG because there is no uniform definition of the term. Instead, it refers to pecuniary and non-pecuniary factors.

This month, President Joe Biden ordered an immediate review of federal regulations passed in the last four years that conflict with the national objective of confronting the climate crisis. ESG funds prefer companies that avoid environmental risk and that focus on solutions to climate change.

Bryan McGannon, director of policy and programs at US SIF, a nonprofit devoted to promoting sustainable investment, says he expects the DOL “to issue guidance to clarify that ESG criteria is pecuniary under the definition of the rule.” The DOL can do that without the cumbersome notice and comment period.

For that to happen, Biden must appoint an acting director of the Employee Benefits Security Administration, analysts say. A permanent director must be approved by the Senate.

It will take at least 18 months to revise the rule completely so that ESG investment criteria are formally considered pecuniary, or for the language regarding pecuniary and non-pecuniary distinctions to be removed, McGannon says.

Sustainable funds are likely to be popular as retirement-plan options. Net new investment flows into sustainable funds of $51 billion in 2020 were more than double their total for 2019 and nearly 10 times more than in 2018, according to fund tracker Morningstar. That accounted for almost a quarter of all stock and bond fund flows last year.

And recently, ESG funds have done well, such that 101 of 161 stock and bond mutual funds and ETFs with sustainable objectives have beaten their category peers in the last five years, according to Morningstar Direct. Some of the largest funds, such as the $23.3 billion Parnassus Core (ticker: PRBLX), $13.3 billion iShares ESG Aware MSCI USA (ESGU) and $10.8 billion Vanguard FTSE Social Index (VFTNX), have done exceptionally well, meriting five stars from Morningstar for their strong risk-adjusted performance and, in the case of Vanguard and iShares, low fees.

For now, the rule has dissuaded plan sponsors from adding ESG funds to their offerings until there’s more clarity on the issue. “The flows into ESG funds last year were huge, interest from investors is higher than ever, and asset managers are using it more than ever,” says Jon Hale, Morningstar’s head of sustainability research. “It would be precisely the time when we would see a lot more particularly defined contribution [401(k)] plans, wanting to or being interested in adding ESG. And this rule is having a clear chilling effect on that.”

That chilling effect includes Morningstar’s own retirement management group, which advises plan sponsors on fund selection, Hale says. “Morningstar is in the same boat as everyone. We don’t as a firm agree with the rule, but it is in effect.”
 
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Big Ideas & Disruptive Trends to notice & invest in, so you become rich:


  1. 5G: There are 5 million 5G connections in 2019, but the projection for 2030 is 6.5 to 7 billion. With 5G set to be rolled out in 2020, it will fuel significant innovation over the next decade via faster speeds (20 x 4G), greater capacity (10x 4G), and more flexibility. The ability of this technology to transmit large amounts of data wirelessly will open doors for a vast array of new applications, ranging from autonomous driving to remote surgery. Fifth generation (5G) wireless networks are expected to enter service in 2020, and become widespread over the next 5 years. 5G networks could be a hundred times faster, substantially more reliable, consume less energy, and have much greater capacity then today’s 4G LTE and 3G networks. As such, many of our existing digital activities could become speedier and more valuable, clearer voice calls, faster searches, and smoother streaming are the most obvious. But the real potential of 5G lies in enabling functions that are either difficult of impossible with existing networks. The 5G combination of high speed and low downtime should allow many more industrial, urban, and household functions to be reliably connected and automated. These include self-driving vehicles, almost entirely automated factories where thousands of machines and processes communicate wirelessly with each other, and sugary performed on humans by a robot controlled by a surgeon from a remote location.

  2. Artificial Intelligence & Robotics: As robotics, automation and artificial intelligence play an ever larger role in business and daily life, we expect the technology sector to produce above average returns during to 2020s

  3. Carbon Capture:

  4. China:

  5. Clean Energy: Remember, a top priority of the 2020 Democratic win was clean energy

  6. Cloud Computing:

  7. Cyber-security: Cybersecurity is at the forefront of business and government decision makers minds. (Several hundred data records were stolen in the time it took to read this paragraph). The cyber security vendors we cover have formed economic moats by becoming part of the lifeblood of customers, and we believe the potential disruption associated with changing from these vendors is not worth the risk.

  8. Electric Vehicles: China is the world’s largest auto market. China has sold more electric vehicles in the past year than the rest of the world combined.

  9. Fin-Tech: Given that 80% of the world's transactions are still done with cash and check, the number of electronic transaction should continue to grow exponentially. Investors continue to underestimate the pace of growth in electronic and mobile payments that will occur over the next several years, given the penetration of smartphones around the world and the rise of mobile banking, mobile payments and a still-underpenetrated e-commerce market.

  10. Genetic Therapies: Such therapies – including replacing and editing genes or entire cells – hold out the promise of curing chronic diseases with a single treatment, improving outcomes while reducing or even eliminating out-patient costs

  11. Health-tech: Healthcare will become increasingly digitalized. New applications like population health software, AI-assisted diagnostic imaging will help target and deliver care, improve diagnostic effectiveness, and transform the healthcare industry.

  12. Lithium: Improving battery technology has meant rapid growth rates for electric cars and hybrids. This will increasingly cut into the growth rate of gasoline and diesel fuel consumption

  13. Palladium: Palladium enters the emissions equation through our transportation infrastructure. As the key component in catalytic converters, the scarce white metal transitions as much as 90% of the harmful hydrocarbons and carbon monoxide in engine fumes into less noxious emissions like carbon dioxide and water vapor

  14. Plant-based foods:

  15. Semiconductors: The Semiconductor industry is exposed to secular themes such as cloud computing, AI, and 5G. Semiconductor chips should be in a great position to hand gains when the trade war comes to an end.

  16. Space tourism:

  17. Water scarcity: China and India represent 35% of the world’s population, yet have access to less than 10% of its freshwater resources

To join the discussion on these topics: Fluent In Finance's Flowpage
 

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