Fortune - USA (2020-12)

FORTUNE DECEMBER 2020 /JANUARY 2021 71

ations they got, and people wouldn’t have lost billions of dollars.

EISWERT: I can’t even keep track of them. We have 150 analysts,

and I still don’t even know what’s going on. You can’t do the kind of

due diligence that you want to do.

FORTUNE: Of SPACs that have taken a company public, are

there any that seem like models for doing it right?

BROWN: DraftKings looks good. I like everything about the way

they did that. And it was early.

YEN: There are very strong companies that could have done this if

they wanted to, but they didn’t—Snowflake, for example. As with

everything, there’s a 1.0 model, and the ones that aren’t as strong

are going to fall by the wayside.

KETTERER: I’m going to add that the proliferation of SPACs, plus

the record level of loss-making IPOs, tell us something, which is,

we’re at a very exuberant part of the market cycle. And what hap-

pens after that?

FORTUNE: The pandemic drew attention to the way companies

conducted themselves as corporate citizens. Are investors start-

ing to pay a premium for better behavior?

SUBRAMANIAN: From February to March, in the fastest bear

market we’ve ever had, it was fascinating to see the differentiation

of stocks based on some social factors. For example, within sec-

tors, companies with happy employees dramatically outperformed

companies with unhappy employees. We also found that companies’

policies around leave were a very important differentiator of returns.

We’re all used to thinking about governance risks and financial risks

as the big drivers during downturns. But we actually saw these more

employee-geared or community-geared factors driving a lot of the

returns during that quick but very severe bear market.

BROWN: From that severest point through October, sustainable

funds and ESG funds took in $30.5 billion in new flows. By the

summer, we had taken in more in that category than in all of 2019.

And that 2019 number was four times the previous year. A lot of

old-school portfolio managers scoff at it. Like, who cares how a

company treats its employees? When you talk to investors in their

twenties and thirties, they care so much.

at direct listing: Slack went public that way.

Not great for shareholders who came in in the

aftermarket, and not just because the stock

hasn’t performed well. There’s no lockup for

insiders. Executives are free to sell, and they’re

not under any pressure whatsoever to deliver

results. Whereas if you come public in the

traditional way, the insiders are locked up for

six months, nine months.

With SPACs, I get it: The IPO road show is

arduous; you can’t do it in COVID times. This

is a really efficient way to match an investor

with a company. But that’s the thing: It’s one

investor, the SPAC, deciding this is the right

price for this company. There is no vetting

process. And what we’ve seen with Nikola

and others, like MultiPlan, is that oftentimes,

these companies would have benefited from

having more vetting on a traditional road

show. They would never have gotten the valu-

If you’re in an innovative sector and your employees

are unhappy, they’re going to go to a competitor,

and you’re going to lose your advantage.”

SAVITA SUBRAMANIAN • BANK OF AMERICA MERRILL LYNCH

Mallun Yen

• Operator Collective

MATTHEW SPROUT—COURTESY ARGENT