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Demand For Impact Investing Is Rising. Here’s Why

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When leaders think of investing, their minds often jump to publicly traded stocks or bonds. But that’s starting to change with the rapid growth of private markets or any asset, such as debt or real estate, not traded on public exchanges, according to research by Mckinsey. The Global Impact Investing Network (GIIN), an international think tank on impact investing, recently released a study that estimated the private impact market grew to approximately $1.2 trillion at the end of 2021—up 63% since 2019. While this is an extraordinary jump, it appears to be the tip of an iceberg, as a group of cross-sector corporations worth $16 trillion met last month with the UN Secretary-General to discuss closing the $4.3 trillion financing gap for countries striving to reach the 2030 Sustainable Development Goals (SDGs).

The SDGs, also known as the Global Goals, provide a roadmap for leaders solving some of the world’s most pressing challenges, including providing affordable housing and development loans to underserved communities or tackling global challenges around energy, water, circular economies, sustainability, and healthcare. UN member states adopted the Goals in 2015 as a shared blueprint for peace and prosperity for people and the planet. But implementing solutions requires significant new commitments in capital, which should “inspire leaders to invest responsibly and make a difference in the world,” said Jack Tillotson, a lecturer at the University of Vaasa, in an interview.

The increase in investment opportunities and commitment by nations, corporations and asset managers has led to greater awareness of impact investing. However, the general population still needs to familiarize themselves with this term. Simply put, impact investing is a type of investment that seeks to generate both financial return and positive social or environmental impact. “This type of investing is becoming more popular as people realize that profits and purpose can go hand-in-hand,” observed Tatiana Mitrova, a research fellow at Columbia University, in an interview. Studies have shown that this demand has been most pronounced in Gen Z, Gen X and Millennials, who are seeking investments that are sustainability focused and can have a positive impact on the world. However, according to Mitrova, access and complex due diligence of investment opportunities in this space continue to limit broader market adoption.

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These points are validated by Josh Hile, CEO and co-founder of Citizen Mint, a fintech web platform providing access to private market impact investments. “The demand for investments, especially among Gen X and Millennials, that align financial resources with personal interests and values simply isn’t being met in today’s market,” said Hile in an interview. “We started Citizen Mint to provide a new pathway for investors to participate in private market projects that seek to maximize financial returns while having a direct positive impact on the world.” Consequently, the web platform and advanced fintech software marry users’ financial needs and personal values by offering opportunities to partake in impact investment funds that reap positive environmental and social effects. This allows for coexistence between the two, making the platform a primary example of how private capital can help to solve global challenges.

Alternative Investments That Drive Progress

The world is currently at a crossroads. We can either continue on the path of extractive capitalism—a model based on the extraction of profit from humankind and nature—that has led to inequality and environmental destruction or shift to a new sustainable, inclusive prosperity model. The latter will require significant investment in areas such as renewable energy, affordable housing, healthcare, and education. And it will require a new way of thinking about investing, one that considers financial returns and social and environmental impact, because governmental organizations have long been the primary funding sources for social programs and initiatives to drive progress.

Perhaps that’s why recent years have seen a rise in philanthropy and impact investing as supplemental or replacement financing mechanisms. This is likely because many governments struggle with large budget deficits and mounting debt. And it’s also because private investors are increasingly interested in putting their money into projects that will positively impact society and the environment. That said, major asset managers such as KKR, Bain Capital and TPG’s The Rise Fund reserve access for institutions like pensions and endowments and ultra-wealthy individuals.

Consequently, investment platforms like Citizen Mint are tackling this issue, working to remove impediments to provide easier access to curated opportunities with lower minimums. With easier access through a user-friendly platform, investors looking to align their values with their money can confidently partake in alternative investments focusing on social progress in sectors like affordable housing and renewable energy.

The rise of impact investing has coincided with a growing awareness of the need to address social and environmental challenges. As more people become aware of the problems we face, they are also increasingly interested in finding solutions that generate both financial returns and positive impacts, which is why with the right tools and platforms in place, private investors can play a significant role in financing the transition to a sustainable economy.

But, we need leaders to move away from a model of extractive capitalism and towards one that is sustainable, inclusive, and regenerative because the evidence is clear: there is a growing market demand for sustainable, impactful investments, and private capital is increasingly seen as a critical source of financing for social and environmental initiatives. However, to meet this demand, society needs to create new channels for connecting investors with projects that need funding. The sooner that happens, the better off we will be. After all, the time for impact investing is now.

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Zacks Investment Ideas feature highlights: Alphabet, Tesla, Shopify, Amazon and Palo Alto

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For Immediate Release

Chicago, IL – February 2, 2023 – Today, Zacks Investment Ideas feature highlights Alphabet GOOGL, Tesla TSLA, Shopify SHOP, Amazon AMZN and Palo Alto Networks PANW.

Which of These Stocks Has Been the Best Buy, Post-Split?

Stock splits have been a regular occurrence in the market over the last several years, with many companies aiming to boost liquidity within shares and knock down barriers for potential investors.

Of course, it’s important to remember that a split doesn’t directly impact a company’s financial standing or performance.

In 2022, several companies performed splits, including Alphabet, Tesla, Shopify, Amazon and Palo Alto Networks. Below is a chart illustrating the performance of all five stocks over the last year, with the S&P 500 blended in as a benchmark.

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As we can see, PANW shares have been the best performers over the last year, the only to outperform the general market.

However, which has turned in a better performance post-split? Let’s take a closer look.

Tesla

We’re all familiar with Tesla, which has revolutionized the EV (electric vehicle) industry. It’s been one of the best-performing stocks over the last decade, quickly becoming a favorite among investors.

Earlier in June of 2022, the mega-popular EV manufacturer announced that its board approved a three-for-one stock split; shares began trading on a split-adjusted basis on August 25th, 2022.

Since the split, Tesla shares have lost roughly 40% in value, widely underperforming relative to the S&P 500.

Palo Alto Networks

Palo Alto Networks offers network security solutions to enterprises, service providers, and government entities worldwide.

PANW’s three-for-one stock split in mid-September seemingly flew under the radar. The company’s shares started trading on a split-adjusted basis on September 14th, 2022.

Following the split, PANW shares have struggled to gain traction, down roughly 15% compared to the S&P 500’s 3.3% gain.

Shopify

Shopify provides a multi-tenant, cloud-based, multi-channel e-commerce platform for small and medium-sized businesses.

SHOP shares started trading on a split-adjusted basis on June 29th, 2022; the company performed a 10-for-1 split.

Impressively, Shopify shares have soared for a 50% gain since the split, crushing the general market’s performance.

Alphabet

Alphabet has evolved from primarily being a search engine into a company with operations in cloud computing, ad-based video and music streaming, autonomous vehicles, and more.

Last February, the tech titan announced a 20-for-1 split, and investors cheered on the news – GOOGL shares climbed 7% the day following the announcement. Shares started trading on a split-adjusted basis on July 18th, 2022.

Alphabet shares have sailed through challenging waters since the split, down 10% and lagging behind the S&P 500.

Amazon

Amazon has evolved into an e-commerce giant with global operations. The company also enjoys a dominant position within the cloud computing space with its Amazon Web Services (AWS) operations.

AMZN’s 20-for-1 split was a bit of a surprise, as it was the company’s first split since 1999. Shares started trading on a split-adjusted basis on June 6th, 2022.

Following the split, Amazon shares have lost roughly 18% in value, well off the general market’s performance.

Bottom Line

Stock splits are typically exciting announcements that investors can receive, with companies aiming to boost liquidity within shares.

Interestingly enough, only Shopify shares reside in the green post-split of the five listed.

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Zacks Investment Research

800-767-3771 ext. 9339

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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$13 million investment in Campbellford Memorial Hospital

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The Campbellford Memorial Hospital will be receiving a $13 million investment from the Ontario Government to address infrastructure concerns.

The announcement was made at the hospital by Northumberland—Peterborough South MPP David Piccini.

The $13 million is broken down as follows:

  • $9,639,900 will be going to CMH as one-time capital funding to address the HVAC and generator
  • $1,874,929 for reimbursement of CMH’s COVID-19-related capital expenses
  • $771,797 in COVID-19 incremental operating funding
  • up to $600,000 in one-time funding to support the hospital’s in-year financial and operating pressures
  • $163,600 in pandemic prevention and containment funding
  • $81,132 through the Health Infrastructure Renewal Fund
  • $46,884 in health human resources funding.

Interim President and CEO Eric Hanna welcomed the news, saying much needs to be done about the HVAC and generator.

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At the announcement, Hanna spoke of the issues with the generator.

“I’ve got the wee little generator up at the lake and then I’m thinking well, everything should be going well at the hospital,” Hanna told the audience in attendance.

“You get a call from the person in charge who says, ‘Guess what Eric? Generator didn’t start. Oh, so what does that mean? There’s no power in the hospital.’  That’s happened a couple of times in the past year and the generator is over 30 years old.”

Hanna says the solution was not as easy as replacing the generator.

“You can go buy the generator and that may be about a million dollars. But then when we found out afterwards, we came to hook up the new generator to the electrical distribution system and said it won’t work with that because your electrical distribution system is 1956. You can’t plug this generator into that. So now we’re putting close to $5 million into a whole electrical distribution system so the generator will work. It’s part of that ongoing thing and that’s why these costs continue to go up.”

The HVAC system was also something addressed by Hanna.

“It’s a contract close to $7 million to replace that. This wing, for example. There’s no fresh air in this wing. It hasn’t worked in here for 15 years. So now this is administrative areas and the concern was that in some of the patient carriers, it wasn’t working either.  So – having those discussions with David (Piccini) and saying what we have to do to correct this.”

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Chile’s Enap Set to Slash Debt Burden That Weighed on Investment

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(Bloomberg) — Enap, Chile’s state oil and gas company, plans to use near-record earnings to slash its debt burden, while increasing investment in its refineries and in exploration and production.

The company aims to reduce its debt load to about $3 billion “medium term” from the current $4.3 billion, Chief Executive Officer Julio Friedmann said in an interview. Plans include a bond sale in the first half of this year to refinance some securities.

The improved financial position — with 2022 profit surging to $575 million — comes after Enap’s oil and gas operations in Egypt, Ecuador and Argentina got a boost from high crude prices, while healthy international refining margins benefited plants in Chile. Those trends are expected to extend into this year and next, enabling the company to pre-pay some short-term obligations. About half of the current debt burden matures in the next three years.

“We are going to issue bonds,” the MIT-trained executive said Wednesday from the Aconcagua refinery in central Chile. “We are closely evaluating the local and international markets.”

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At the same time, Friedmann, who took the reins at Enap in November, plans to increase capital expenditure to about $700 million this year from $550 million last year.

The increase comes after underinvestment in the past few years because of Covid restrictions and the heavy debt load. Spending will focus on making treatment processes cleaner and upgrading infrastructure, as well as a more aggressive approach to increasing gas reserves in the far south of the country, he said.

Gas Markets

Enap plans to expand in both liquefied petroleum gas and natural gas markets in Chile, focusing on the wholesale business and eventually selling directly to large-scale consumers such as mines. Organizational changes to enable the expansion will be announced soon. There are no plans to enter the final distribution business, Friedmann said. The company wants to supply more gas to southern cities as a way of replacing dirtier fuels such as wood and diesel.

Enap and its partners are also preparing pipelines and a refinery near Concepcion to start receiving crude from Argentina’s Neuquen basin sometime this year in an arrangement that could supply as much as 30% of its needs.

While there’s plenty of potential do collaborate more with energy-rich Argentina, particularly in the Magallanes area, that would require greater long-term visibility on supplies from the neighboring country, Friedmann said.

He sees a role for Enap in the development of green hydrogen in Chile. It’s in talks with three companies to enable its facilities in Magallanes to be used to receive all the wind turbines, electrolyzers and other equipment that will be needed to make the clean fuel. Enap is also evaluating its own small pilot plants and will consider whether to take up options to enter other green hydrogen projects as an equity partner.

While the company will maintain its focus on meeting rising demand for traditional fuels, it anticipates new regulation that will require lower emissions. It’s also looking closely at clean-fuel options for aviation, Friedmann said.

(Adds clean fuel plans in last paragraph. I previous version corrected spelling of CEO’s surname.)

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