IMP Matrix Rating: H2*/C2
*”Harmful” is not an official category of the IMP investor matrix. This hedge fund, however, shorts the stock of companies that are detrimental to people and planet, therefore we choose to categorize it as a way of proactively and consciously invest in harmful companies, to drive change.
What: Atlas Impact Partners is a long-short absolute return hedge fund designed to capture investment opportunity at the nexus of innovation, disruption, and impact. It takes long positions in small to mid-cap companies that provide “differentiated commercial solutions to the world’s most critical environmental, health, social, and financial challenges”, and short positions in companies that exacerbate those challenges. A simple way to think about the strategy is that it might take a long position in a company that generates renewable energy, which contributes to the decarbonizing of the economy in order to address climate change, while taking a short position in an oil company, which contributes to creating climate change in the first place. Similarly, the fund might invest in a biotechnology company that’s developing a cancer drug, while shorting a tobacco company whose products are a leading contributor to lung-cancer. The six key themes it invests in are: 1) Enabling Environmental Solutions, 2) Modernizing Capital and Industrial Infrastructure, 3) Harnessing Beneficial Digitization, 4) Creating a Sustainable Food System, 5) Unique Solutions for Healthy and Productive Living, and 6) Financial Services as a Force for Good.
Who: The stakeholders of the public companies the fund invests into.
How Much Impact: Atlas published its first impact report in 2020, describing its approach to impact investing with examples of portfolio companies and their respective impacts. The report provides generous insight into the Fund’s approach to identifying and measuring the impact of the long and short positions in the portfolio.
Our Contribution: We invested in the fund mainly for financial risk mitigation and diversification reasons, but with the aim to find an impact-aligned way of doing so in the public equities world, and of rewarding an emerging fund manager in the field by adding to their assets under management.
Impact Risk: Atlas’s main contribution is the shorting of harmful companies, which can be seen as “divestment on steroids”, although it’s unclear how that actually would have an effect on the outside world. Unfortunately, the fund does not plan to engage with the companies it holds or shorts. Therefore, in summary, the opportunity to generate actual investor impact is limited.
Sample Investments: Long: SMA Solar, a leader in solar inverters; Short: a diesel bus company