In ESG investing, ESG stands for environmental, social and governance. ESG investing is investing with a conscience - and today, the investment opportunity is mind-blowingly massive. Global ESG assets are on track to exceed $53 trillion by 2025. That means more than one-third of all investment assets under management globally are expected to be ESG-compliant within four years. There is zero doubt that there is going to be a torrent of money flowing into ESG stocks. They will receive premium valuations because there will be so much money chasing them. Their stock prices are going to do well. But here is the weird thing... These ESG money flows may also signal a big investment opportunity in anti-ESG stocks - the stocks that ESG funds are not allowed to own. This Stock Is Dirt Cheap, but the Bond Market Still Loves the Company Bond investors as a group are generally thought of as the "smart money." They are less prone to the type of wild speculation we often see in the stock market. That is because bond investors are more focused on the underlying fundamentals of a company. Bond investors are lenders. They are turning their money over to a company and need to know whether they are going to get paid back. Bond investors do the really deep due diligence and figure out how much actual cash flows a business can generate. Typical stock investors are much more emotional. And sometimes stock investors aren't even people - but rather, they are trading algorithms that don't even know what a company does. The smart bond market is telling me something fascinating today about Altria Group (NYSE: MO). The bond market loves this tobacco manufacturer. Yet this is a business that is incompatible with ESG principles if there ever was one. The Altria Group (CUSIP 02209sau7) September 16, 2026, 2.625% coupon bonds currently offer a minuscule yield to maturity of 1.31%. I wouldn't lend my wife money for five years at a rate that low! The bond market is telling us that Altria Group's cash flows over the next five years are sound. The Altria Group (CUSIP 02209sav5) September 16, 2046, 3.875% coupon bonds are even more astounding. The current yield to maturity on this tranche of debt that matures 2 1/2 decades from now is only 3.7%. Again, that is a clear signal that the bond market sees Altria Group's long-term cash-generating ability as extremely reliable. That is interesting because the stock market has a very different view of Altria Group... |
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