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A new fund aiming to punish “woke” companies will make Starbucks its first target, as politically motivated investors move to capitalise on Donald Trump’s election.
The actively managed fund, which Azoria Partners expects to launch early next year, will exclude S&P 500 companies that incorporate diversity, equity and inclusion considerations into their hiring processes.
The fund will unveil its Starbucks plan on Thursday at Trump’s Mar-a-Lago resort in Florida, according to prepared remarks seen by the Financial Times.
The event will be attended by Cathie Wood and Kevin Roberts, the ideologue behind the Project 2025 blueprint for Trump’s government, according to an invitation seen by the FT. Wood and Roberts did not respond to requests for comment.
“Americans, whether they voted for president Trump or not, do not want to invest in companies running woke science experiments,” said James Fishback, one of Azoria’s founders, in an interview, referring to hiring practices that factor in diversity. “We are representing shareholders here, and human capital hiring quotas — that hurts all shareholders.”
The coffee chain, with a market capitalisation of about $110bn, denied in a statement to the Financial Times that it had “targets or quotas at any stage of the hiring process”. The chain said that policies cited by Azoria — which included reaching racial and ethnic diversity of at least 30 per cent among corporate employees — recently expired and were not reinstated.
The new fund is the latest attempt by Trump-supporting investors to push back against DEI and environmental, social and governance initiatives by big US companies — and to profit from the coming change in government in Washington.
Shares in Starbucks, which has around 40,000 coffee shops globally, have lagged behind the broader market this year but have risen since August on hopes that newly appointed chief executive Brian Niccol would turn its struggling business around.
The new “anti-woke” fund, created by Fishback and his Azoria co-founder Asaf Abramovich, has a list of about three dozen other companies it will exclude from the roster, unless they scrap their DEI policies.
Roberts, president of the Heritage Foundation think-tank, and Wood, founder of Ark Investment Management, are both scheduled to address the event at Trump’s resort on Thursday.
Fishback’s fund does not manage any money yet, meaning the Starbucks campaign lacks the financial heft to influence the retailer’s decisions. Powerful activist fund Elliott Management recently built a large stake in the chain, helping to spur replacement of its CEO earlier this year.
Unlike an activist hedge fund, which buys stakes in companies to agitate for change, Azoria will push its agenda by excluding companies from their index and publicly claim DEI policies are hurting their stock price.
The strategy borrows from so-called environmental, social and governance funds, which excluded investments in polluting industries and were attacked by many conservatives.
Azoria’s new ETF is set to launch early next year under the ticker SPXM, which stands for S&P Meritocracy. In remarks at the Mar-a-Lago event, Fishback will claim the stocks of S&P 500 companies that factor diversity into hiring have underperformed their rivals.
Some research has contradicted that, including a McKinsey report last year that found companies in the top quartile of racial diversity were 39 per cent more likely to perform better than those in the bottom quartile.
Fishback, who previously worked at hedge fund Greenlight Capital and is mired in a legal dispute with its founder David Einhorn, is among Wall Street investors aiming to cash in on a conservative shift as Trump returns to the White House.
Other politically driven investors have punched far above their weight. The activist investor Engine No. 1 secured three board seats in 2021 at ExxonMobil by mounting a campaign against the oil major while only overseeing $240mn worth of assets.
Fishback argued hiring on ethnic and racial diversity grounds was a political act that would hurt shareholders.
He said: “Cut that crap out. Hire the best and brightest. Don’t apologise for it, make money, give it to shareholders, and do the right thing.”
Additional reporting by Gregory Meyer and Antoine Gara in New York