Constraints on capital yield investment opportunities with a contrarian, against-the consensus view.
Our Firm
Constrained Capital
Capital constraints are social, political, and regulatory influences that cause misallocation of capital and malinvestment. Sectors/securities under capital constraints provide higher expected returns over time. The higher cost of capital in these excluded sectors, should generate better risk-adjusted returns over longer horizons.
Constrained Capital was founded to help investors find smart, contrarian themes to opportunistically capitalize on greater expected return scenarios.
These are part of our differentiated strategies for investors who think critically.

Our Strategy
ESG Orphans Index
Over the past decade the greatest capital constraints in markets are due to ESG investing. This incongruous investing theme systematically excluded the following 6 sectors: Fossil fuel, nuclear energy, weapons/munitions, tobacco, alcohol, and gaming. The ESG Orphans Index is 25% Fossil Fuels, 25% Nuclear Energy, 21% Weapons/Munitions, 12.5% Alcohol, 12.5% Tobacco, and 4% Gaming. These are high-expected return securities due to ESG capital constraints imposed on them. As a result, they can provide greater risk-adjusted returns over time.
Who are the ESG Orphans
In the News
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$ORFN 25% fossil fuels, 25% nuclear energy....these are vital, not political. Been excluded for so long by ESG false equivalences....reversion coming, these Orphans, "Don't forget us, you're going to need us."
Bridge to future energy, whatever it is, will be current energy.
Morning….Can’t get to future energy without present energy…our economy is too retrofitted. Sunday AM version:
https://www.realclearenergy.org/articles/2023/01/24/are_you_really_against_fossil_fuels_read_this_before_you_answer_877363.html
*New* The Strategy Behind The Fund: Constrained Capital ESG Orphans ETF $ORFN with @MarkNeuman18
https://pictureperfectportfolios.com/strategy-behind-constrained-capital-esg-orphans-etf-orfn/
"The ESG Orphans are the exclusions of the ESG bubble of the past decade.
The exclusions were starved of capital for arbitrarily decided reasons."
Ebbs/flows in ESG. Politicization of ESG clouds the story. Investors misled, objectives failed, fees high. Larry Fink narrative pushed irrespective of investor preferences.
Political football game will continue. Net/net, more flows to ex-ESG, ESG Orphans!
ESG-Wary House Republicans Seek to Rein in SEC, BlackRock (1)
The Republican-led House is starting to ramp up its attacks on environmental, social and governance investing, putting...
news.bloomberglaw.com
Barron's on ESG outflows:
Higher rates and over hiring has its impact.
Terrible ESG returns, failed objectives, higher fees all contribute to folks bailing on ESG.
I think we hit peak ESG in 2021. Now the unwind ensues, will take time. Flows to ex-ESG now.

ESG Funds Suffer Worst Outflows in Five Years
Net withdrawals reached nearly $6.2 billion, according to a report from Morningstar. Rough markets and the politicizati...
www.barrons.com
Herein lies the challenge to all in ESG convos:
ESG raises costs & lowers returns. There's a cost to being virtuous, good, and sacrificing. Damodaran, Cliff Asness know this. They don't have axes to grind.
We're about Truth in ESG. That's fiduciary duty.

When the New Right Meets the Old Left on ESG
...
realclearwire.com
The crux of the past decade of QE/ZIRP & enabling the distortion/fraud in investing to climb to unprecedented heights:
I have a piece coming soon on the bubble of all bubbles: SPACs, NFTs, cryptos, ESG. This article highlights the combo of the last two!

Cryptocurrency Was Sold To State And Local Pensions As ESG
Not so long ago, cryptocurrency was sold to state and local government pensions as consistent with their ESG objectives.
www.forbes.com