Fort Worth Money Manager Cashes In On Trump With MAGA Fund

The fund avoids investing in companies like Target, that have taken stands in favor of transgender bathroom access.

By Christopher ConnellyNovember 16, 2017 9:30 am, , ,

From KERA:

A north Texas money manager wants to make America great again, one investment at a time.

For people concerned about a portfolio that undermines their partisan preferences, a new exchange-traded fund – ticker symbol: MAGA – was built from the most GOP-friendly companies. The fund’s founder calls it “politically responsible investing,” likening it to cause-based, social responsibility investment strategies.

The MAGA Fund is the brain child of Hal Lambert. He’s a longtime Republican fundraiser, an ardent supporter of Sen. Ted Cruz, and the founder of Point Bridge Capital in Fort Worth. Lambert said he did get on board with, and raise funds for, Donald Trump after he became the GOP nominee. Now, the tagline on the Point Bridge Capital website is “Make Investing Great Again.”

Lambert says he first started thinking up the idea of a politically inflected investment vehicle more than a year ago. He’d been bothered by CEOs of major companies taking political stances; mostly out of political correctness, he thought. It’s a trend he’s seen play out more and more.

“A lot of these companies’ CEOs are speaking up now. They boycotted President Trump, got off of his advisory panels. They’re speaking about DACA. And quite frankly, those things don’t have anything to do with the products that they’re making” Lambert says. “This is very new in my opinion, as far as companies’ CEOs actively becoming political and making statements about things that have nothing to do with their companies.”

Take Target, he says. The company announced it would let transgender customers use restrooms in its stores that match their gender identity last year in response to transgender bathroom bans backed by Republicans in state legislatures. Conservatives pledged to boycott, and Lambert says he immediately sold off stocks in the company.

“I think politically it made no sense … And I’m looking at it going, ‘How many people own this that are out their boycotting Target?’” he recalls.

So Lambert hired a data guy, and started digging into campaign finance records for companies on the S&P 500. He came up with a list of the 150 companies whose political action committees and employees gave the most to Republican candidates in the last election. The list includes host of household names, including AT&T, John Deere and pretty much all the oil and gas firms. Lambert rolled them into the MAGA fund, which launched in September.

“Maybe people don’t want to give directly to politicians or they don’t have the money to give to politicians, or they want to save for retirement or they’re trying to save for their kid’s education,” Lambert says. “This is a way to participate in the political process while also investing.”

‘A different animal’

Lambert says he’s trying out a new idea in finance, calling it “politically responsible investing.” It’s a play on socially responsible investing which tailors portfolios based on an investors’ values or causes — avoiding investments in companies that, for example, make weapons or cigarettes or pornography, or divesting from companies that pollute or have bad human rights records.

“This MAGA fund is a different animal. This is like taking the culture wars into the stock markets,” says Bloomberg Intelligence analyst Eric Balchunas.

While not explicitly partisan, Balchunas points to Environment, Social, Governance funds as a functional counterweight to the MAGA fund. The mix of companies that makes up funds that seek to invest only in companies that prioritize environmental stewardship, social equity and transparency are mostly missing from the MAGA fund. Whereas MAGA is heavy on industry and energy and has virtually no technology companies, Balchunas says, ESG funds tend to be tech-heavy and light on oil and gas.

“You could almost rename ESG ‘Democrat’ and call this MAGA fund ‘Republican,’ and divide the stock market into red and blue,” Balchunas says. “And I don’t see this stopping. I see this as something that could have some traction.”

As an investment, Balchunas said MAGA has been off to a pretty strong start, though he says the absence of tech could cause more limited returns in the future. And there’s clearly an appetite for this kind of partisan investing; the fund has grown to more than $30 million in a few months.

Why corporations donate 

Even as some investors are looking for ways to put their money where their politics are, it’s not clear that corporations use their political action committees for the same reasons.

“There is no consensus view of why corporate-linked PACs make campaign contributions,” says Brian Richter, who studies business and politics at UT Austin’s McCombs School of Business.

A lot of companies shy away from funding candidates with their linked PACS. For those that do, the logic is complex. While some industries tend to favor one party over the other – oil and gas likes Republicans, whereas tech likes Democrats – Richter said political donations from corporations are more often about access than ideology.

“They want to get in the door, they want their lobbyist to get in the door, and that way they can give their pitch for why a policy outcome they want is something a politician should be interested in,” he says.

That’s why Richter says that political spending from big, publicly traded companies often shifts back and forth over time.

“In years where Democrats are in power, there’s a shift away from Republican candidates towards Democratic candidates, and vice versa,” he says. “Money tends to follow power out of corporate-linked PACs….because corporate-linked PACs tend to not want to be seen as having a strong partisan bias.”

Hal Lambert says he plans to rejigger the mix of companies after every election cycle to make sure the MAGA fund is always the most GOP-friendly mix.