New York hedge fund manager Lauren Taylor Wolfe is deciding between two stocks to pitch at the Sohn Hearts & Minds investment conference in Sydney. Wolfe, co-founder of activist firm Impactive Capital, has a successful track record at Sohn, including past pitches of Wyndham Hotels & Resorts and KBR. Impactive Capital, which oversees $US2.4 billion in mostly institutional money, aims to identify ESG initiatives that boost business returns.
Wolfe notes a shift in market sentiment, with ESG becoming a sensitive topic. She explains that one company she’s considering presenting has a significant ESG angle but is hesitant to promote it that way. Despite this reluctance, Impactive Capital remains committed to uncovering ESG initiatives that enhance economic returns. The firm looks for opportunities such as improving compensation plans, advising on energy-efficient upgrades, and promoting diversity to address skill shortages.
Wolfe highlights Asbury Automotive, a car dealership, as a successful example of this strategy. Impactive Capital identified a labour shortage in Asbury’s service business and pushed for initiatives to attract more female mechanics, leading to improved utilisation rates. Western Digital is another example of a successful investment, bought in at about $US35 a share and exited when the stock hit $US90 due to the AI boom.
Impactive Capital focuses on a concentrated portfolio of small and mid-cap stocks. The firm aims to beat the market by sticking to its investment principles, even in the face of speculative fervour. Despite recent market challenges, Wolfe emphasises the importance of staying the course and focusing on high-quality businesses with long-term potential. Impactive Capital has an annualised return of 8.93 per cent net of fees since inception, just above the Russell 2000’s 8.32 per cent return.
