When You Know ESG Has Gone Too Far... And Is This Private Retailer Growing Too Quickly?

A recent move by the U.S. Securities and Exchange Commission ('SEC') is coming not a moment too soon... Specifically, the agency is on the scene to focus on bogus claims of environmental, social, and governance ("ESG") by mutual funds, exchange-traded funds ("ETFs"), and other investment vehicles. The SEC is purportedly planning to crack down on […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] When You Know ESG Has Gone Too Far... And Is This Private Retailer Growing Too Quickly? By Herb Greenberg --------------------------------------------------------------- [The best 'portfolio-fixer' stock Berna has ever found]( Berna Barshay's shocking takeaway from this year's Berkshire meeting isn't for the faint of heart. After listening to hundreds of people tell her their fears of losing it all in this market, she's found an under-the-radar company that's about to disrupt an entire $300 billion industry. She expects it to rise as much as 300% over the next three years. [Click here for the details](. --------------------------------------------------------------- A recent move by the U.S. Securities and Exchange Commission ('SEC') is coming not a moment too soon... Specifically, the agency is on the scene to focus on bogus claims of environmental, social, and governance ("ESG") by mutual funds, exchange-traded funds ("ETFs"), and other investment vehicles. The SEC is purportedly planning to crack down on funds that claim they're ESG but really aren't. However, there's something else going on... and it's not just the ESG issue I've railed about previously here at Empire Financial Daily. I'm referring to the way some companies hang out an ESG shingle, to the point of organizing themselves as a "public benefit company," so they can get swept up in ESG funds. Among them: Warby Parker (WRBY), which [I chided for a remarkable lack of transparency]( to its investors for a company with a do-good reputation. It doesn't, for example, disclose the dollar value of eyeglass donations it claims to make for each pair sold. This time, my focus is on something equally farcical… This time, my ire is directed at the way some companies – some really good companies –are getting shunned for not being ESG enough. I hadn't even thought about this until I started researching the company I just recommended in the latest issue of my Investment Opportunities newsletter, which was published on Friday. This company is a supplier of a critical part to a product that's largely considered not to be in the long-term best interest of the "E" in ESG. During my research, I was chatting with a large, longtime investor... and I remarked how odd it was that most of this company's largest investors were quant funds, whose investment decisions are driven by various computer programs. He explained that one reason for the lack of more traditionally fundamental investors – like him – was that the business had been dinged with an ESG penalty. Never mind that this company has plenty of ESG potential buried within it... And yet, it unfortunately doesn't fit neatly enough into an ESG narrative. Therein lies the problem: From an investment perspective, this is a really good company, maybe even a great company. Not only is it well run and throwing off an enormous amount of cash, but it's using the cash to do a creeping buyout of itself. (This is something it'll do if somebody else doesn't do it first... And even if nobody does, the company is a solid operator.) What's more, its products are a critical component to the inner workings of not just the U.S. economy, but economies around the world. No hocus-pocus... just a good, old-fashioned boring business. But... it's just not good enough for the ESG police. You know that old saying about cutting off one's nose to spite one's face? This is the same thing... Equally nonsensical. A good business is a good business, and a good investment is a good investment. Penalizing something because it doesn't fit neatly enough into an ESG narrative is nonsensical. ESG is a good thing, but like all good things Wall Street takes it to the extreme, for better and worse. In any case, you don't want to miss this latest recommendation... If you aren't already a subscriber to Investment Opportunities, you can find out how to gain instant access [right here](. --------------------------------------------------------------- Recommended Link: [Wall Street legend: Five EV stocks to own NOW]( Enrique Abeyta – a former star hedge-fund manager who's been quoted in the Wall Street Journal, Forbes, and CNBC – reveals his five favorite ways to play the EV boom. [He's even giving away his No. 1 pick for free](. --------------------------------------------------------------- Moving on... Can this retailer avoid the trap of growing too fast? We talk mostly about public companies here, but for much of my career I've enjoyed watching the evolution of private companies, especially retailers and restaurants, as they attempt to leap to the next stage – and see whether they can make it... Especially when they're local. Enter Vuori... A year or two ago, I was walking along the main shopping drag in Encinitas – a beachy suburb north of San Diego – when I noticed a store I hadn't seen before. It was called Vuori, and it had one of those casual Southern California looks that I've been gravitating to over the years. (Never mind that I live in SoCal...) Before I knew it, I noticed a store open in a strip center closer to my home. There are times I go by and it's like an Apple (AAPL) store... always crowded. Then I noticed []Vuori clothes in the likes of department store Nordstrom (JWN) and outdoor retailer REI. When I started digging more, I saw Vuori had opened more than a dozen stores – not just in San Diego, but as far away as Colorado... Then, a few weeks ago, I saw [this story]( in the San Diego Union-Tribune that the chain was starting to expand internationally... to seven new countries. That includes plans for a flagship store in the U.K. and 100 additional stores in the U.S. over the next five years. I immediately tweeted: "When's the IPO?" (Obviously, given this market, not anytime soon... and maybe that's a good thing!) Formed in 2015, Vuori raised $400 million last year, giving it a value of $4 billon. It's already profitable, and market research firm NPD [named it]( as an "emerging" activewear brand for this year. In SoCal, it's already starting to open in larger malls... in one case, directly opposite to activewear chain Lululemon Athletica (LULU). The obvious questions arise... Can Vuori avoid the classic entrepreneurial traps? And when it comes to growing, how fast is too fast? And that is the right question, says Chicago-based attorney Lloyd Shefsky, a veteran advisor to entrepreneurs and author of several books on entrepreneurs, including the classic Entrepreneurs Are Made Not Born and Invent, Reinvent, Thrive. (If you like reading about all things entrepreneurs, I recommend all of Lloyd's books.) He adds... Hopefully, they have the right people in place and the flexibility for inevitable bumps in [the] road. Succeed or fail, IPO or no IPO, Vuori is setting itself up as being one for the books... The business books, that is. As always, feel free to reach out via e-mail by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb). And if you're on Twitter, feel free to follow me there at [@herbgreenberg](. My DMs are open. I look forward to hearing from you. Regards, Herb Greenberg June 7, 2022 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. 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