Month: April 2020

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The Bearer of Good Coronavirus News (WSJ)

https://www.wsj.com/articles/the-bearer-of-good-coronavirus-news-11587746176?mod=opinion_lead_pos5

In a March article for Stat News, Dr. Ioannidis argued that Covid-19 is far less deadly than modelers were assuming. He considered the experience of the Diamond Princess cruise ship, which was quarantined Feb. 4 in Japan. Nine of 700 infected passengers and crew died. Based on the demographics of the ship’s population, Dr. Ioannidis estimated that the U.S. fatality rate could be as low as 0.025% to 0.625% and put the upper bound at 0.05% to 1%—comparable to that of seasonal flu.

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Letter: Perhaps the New Mantra Should Be ESG Materiality (FT)

https://www.ft.com/content/7de1b83c-7752-11ea-af44-daa3def9ae03

David Stevenson, in “Are ESG and sustainability the new alpha mantra?” (FTfm, April 6), identifies an important paradigm shift: rather than using environmental, social and governance considerations as an “add-on” to a typical investment process, many are discovering that investors can use ESG concerns as a screen to avoid future poor-performing companies. But this suggests that ESG screens can also be used to find attractive companies to short. Indeed, as some past studies of mine and others show, negatively linked ESG can generate even greater alpha than positively linked ones. I liken this principle to the observation that we tend to like good companies but hate bad ones. In addition to avoiding bad companies, ESG screens can also help find excellent companies. For example, approximately 40 per cent of large US companies now explicitly compensate their top executives for various ESG outcomes. These executive contracts tend to increase both future ESG and financial performance.