One thing to start: Gary Cohn has declined to return his Goldman Sachs pay related to the 1MDB scandal, agreeing to give millions of dollars to charity rather than returning it to the company as it had requested. More here.

Gary Cohn © AP

A note from Arash and JFK: We are heading into the home stretch for DD in 2020. We’ll be publishing straight through to December 25 before a two-week hiatus. 

Thanks to all of you for being a part of our growing community, reading DD daily, watching our virtual events and, most importantly, subscribing to the Financial Times. 

Any ideas to make DD even better in 2021? Write to us directly or at

And if you’re new to us, sign up here

God and activism: ExxonMobil’s holy headache

Who had it on their 2020 bingo card that the Church of England and US hedge fund activists would be sitting on the same side of the table? Not us. 

ExxonMobil has brought the two unlikely camps together. The energy group has in recent days come under pressure from two activists — DE Shaw and new kid on the block Engine No 1. Meanwhile, the CofE has long been at odds with Exxon.

Line chart of Sum over previous four quarters ($bn) showing ExxonMobil’s cash revenues no longer cover capex and dividends, prompting a rise in debt

The firms are concerned about a whole host of issues, including Exxon’s spending and whether it can continue to pay its dividend if it doesn’t cut costs. What the CofE is most concerned about, though, is a transition to cleaner fuels.

Eager to preserve God’s work on Earth, the CofE has become a powerful force in sustainable investment through The Church Commissioners for England, who manage the CofE’s investment fund. They have already said that beginning in 2023 the church will sell shares in fossil fuel companies that are slow to respond to global warming.

Exxon is a lesson on how even small activists can shake up large companies. 

Engine No 1 was launched only 10 days ago and owns just $40m worth of Exxon stock, which is minuscule compared to the energy company’s $185bn market capitalisation. But it has managed to get the support of a large institutional investor — the California State Teachers’ Retirement System, which owns $300m worth of Exxon stock — and the CofE has thrown its weight behind the firm’s demands.

Then throw DE Shaw in the mix, whose stake in the company we don’t yet know but is said to be sizeable.

Justin Welby, Archbishop of Canterbury, is the head of the Church of England © Tolga Akmen / FT Commission

The energy giant was already contending with a historic drop in oil prices and fallout from the coronavirus pandemic (here’s an excellent long-read on that here). According to DE Shaw, the company has underperformed its rival Chevron, which by their account has managed to weather the crisis significantly better. 

While DE Shaw and Engine No 1 are relatively new additions to Exxon’s shareholder book, this isn’t the first time the CofE has spoken out against the company. It seems that if Exxon can’t appease the holy father, it could end up with a helluva of headache. 

On the topic of oil companies coming under scrutiny, the FT’s David Sheppard has an article on troubles at Saudi Aramco, where workers say they are being mistreated by the world’s largest energy company. 

An anti-Spac-er is up big this year

From the plight of Nikola and its founder Trevor Milton to the Spac sponsor gold rush led by blank-cheque evangelists Chamath Palihapitiya and Bill Ackman, the “IPO 2.0” catching fire on Wall Street can feel like anyone’s game. 

But one start-up hedge fund has rolled the dice quite decidedly against the trend.

The New York-based manager XN is up 46 per cent in its first five months of trading, and sees opportunities in betting against the “ever-expanding crop of newly public companies”. That includes groups that went public through Spacs, or special purpose acquisition companies, where “in many cases the incentives are precisely wrong”, its founder Gaurav Kapadia wrote in an investor letter seen by the FT.

Gaurav Kapadia © David Paul Morris/Bloomberg

The fund’s bumper returns largely came from “long” positions in the social media group Pinterest and the online luxury fashion retailer Farfetch among others, the letter said.

While it’s unclear whether XN has yet to short any companies that have gone public via Spacs, Kapadia argued the IPO-alternatives “have been fuelling ‘story hysteria’”. He added: “When economic reality inevitably sets in, we believe there will be substantial downside.”

This isn’t Kapadia’s first rodeo. He co-founded equity hedge fund Soroban Capital in 2010 before leaving when it returned capital from its more than $4bn flagship strategy to focus on a more concentrated portfolio of stocks.

He then hatched XN — a nod to the mathematical notation for exponential growth — as a family office last year and raised more than $1bn before beginning to trade outside capital in July, even as the pandemic roiled markets.

XN’s new investors signed on for 35 per cent of their capital to go toward private investments, an increasingly popular strategy for new hedge funds hoping for higher returns by allocating funds to less liquid securities.

To do this, Kapadia enlisted the veteran dealmaker Jan Bennink as an executive partner as well as former Autodesk and Time Warner Cable chiefs Carl Bass and Rob Marcus.

So far, the fund has four investments in private companies including the plant-based meat company Impossible Foods and the orbital rocket manufacturer Relativity Space.

As for its anti-Spac sentiments, DD is standing by to see if XN will rise to challenge Carson Block’s declaration that they’re “the great 2020 money grab”.

Uncorking Silicon Valley: inside the IPO bubble

Yesterday we told you about the gig economy fever gripping markets on the heels of Airbnb and DoorDash’s splashy debuts.

The champagne was undoubtedly flowing. On Thursday Airbnb shares began trading at $146, a jolt up from the $68 they were priced at late on Wednesday, and more than three times the $44-$50 range the company gave last week.

Airbnb CEO Brian Chesky © Mike Windle/Getty

That values the lossmaking company at $87.2bn — to put it into perspective — more than twice the market cap of Marriott, the world’s largest hotel group.

And that wasn’t even the biggest tech listing by funds raised as of late — that title belongs to Snowflake, the San Francisco data analytics company who, until this year, no one had ever heard of. (Revisit DD’s telling of the company’s September stock market blizzard here.)

The fanfare has inevitably drawn comparisons to the dotcom bubble of the early aughts. Other analysts say it’s something all to its own. “This seems to be a phenomenon driven by IPOs — we’re not back in 2000,” said Bernstein analyst Richard Clarke. “It’s at the end of the year, it’s a great way of driving profits. You can’t afford to miss out.”

But it’s not all fizzy and fun. By relying on labour market arbitrage — paying lower costs for informal workers — Airbnb, DoorDash and their sharing economy lookalikes are raising serious questions over their morality and profitability, writes the FT’s Richard Waters.

A DoorDash delivery worker

As exhibited by Uber, any kindling regulatory fires surrounding the tech unicorns could likely slowdown their growth, points out Elaine Moore from the FT’s Lex column. 

At least, as a small silver lining of global travel restrictions this holiday season, team DD (and our readers) will be spared the sound of Airbnb-ers’ wheelie suitcases dragging across London and New York City streets.

Job moves

  • Ferrari chief executive Louis Camilleri is retiring due to personal reasons, the company stated on Thursday. Executive chairman John Elkann will serve as interim chief until a successor is found.

  • Vickee Jordan Adams will join the advisory firm Finsbury as a partner in New York in January when it becomes Finsbury Glover Hering. She is a former Wells Fargo senior vice-president. 

  • The law firm Reed Smith is hiring James Atkin as a partner in its global energy and natural resources group. He joins the London office from Orrick, Herrington & Sutcliff.

  • K&L Gates has recruited Paul Eckles as a partner in the litigation and dispute resolution practice. He joins the firm’s Charleston office from the New York office of Skadden, Arps, Slate, Meagher & Flom, where he practised for 25 years.

  • Hogan Lovells is hiring Courtney Devon Taylor as a partner in its litigation, arbitration and employment practice in Philadelphia and New York. She joins from Schnader Harrison Segal & Lewis.

Smart reads 

Laying down the law In the wake of Ant’s derailed IPO, Chinese president Xi Jinping is taking unprecedented steps to clamp down on the private sector, installing Communist party officials across companies and even absorbing freewheeling companies into state-owned enterprises. (Wall Street Journal

Liquid gold When the pandemic sent oil prices plummeting below zero in April, plucky London oil traders led by a man affectionately known as “Cuddles” turned an unthinkable $660m profit. (Bloomberg)

In memoriam Joseph Safra, the prudent and seclusive financier who became the world’s richest banker after building an international empire from his adopted country Brazil, has died aged 82. Here is a look at his life. (FT

News round-up

Siltronic/GlobalWafers: silicon rally (Lex) 

McLaren seeks up to £500m in possible blank-cheque merger (FT)

Sony buys anime streaming service Crunchyroll from AT&T for $1.2bn (FT + Lex)

Hunter Biden reveals federal investigation into his tax affairs (FT)

GE to pay $200m to resolve SEC probe into claims it misled investors (FT)

CEOs pledge 1m jobs for black Americans (WSJ) 

Regulator allows UK banks to restart dividends (FT + Lex

BT breaks up Italian business with sale to Telecom Italia (FT)

Italy’s Banco BPM, BPER considering merger in first half 2021 (Reuters)

Due Diligence is written by Arash Massoudi, Kaye Wiggins and Robert Smith in London, Javier Espinoza in Brussels, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Francesca Friday in New York and Miles Kruppa in San Francisco. Please send feedback to


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