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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MO acquired NJOY early March pushing more to vape. It's how MO (3.6% wgt ESG Orphans) makes an ESG appeal. They're good E & G stewards. Their product (in "S") is not the best. They're trying to improve. Arguably less harmful to "S" than KO/PEP?
Also 8.45% div yld, inelastic good.
Round & round the shiny ESG object goes. The dogs chase the hare. (They'll never catch it, but the bets keep piling in.)
MSCI says downgrades are coming. Recall BBerg MSCI article saying they don't care about ESG but about creating indices, collecting fees

After Slamming ESG Plan, Fund Managers Are Told to Sit Tight
Asset managers are being advised by their lawyers not to adapt portfolios to planned ESG rules that would force many to abandon the label.
www.msn.com
Another dart to the ESG heart:
Summed in this: Morningstar needs better sources, a single standard for global controversies, & analyst education in law & relevant history.
ESG ratings/analysis has no consistency/standard.
MIT said, "Aggregate confusion."

Another problem with ESG investing: Anti-Israel bias
The truth about environmental, social, and governance investing began coming into focus last year. A report commission...
www.msn.com
As the end of Q1 approaches, I look back to what we talked about in December 2022 (FTX/ESG/crypto bubble & rates) while on Reuters TV:
With FTX debacle, 'the crypto bubble has now imploded' -CIO | Reuters Video
Mark Neuman, CIO and Founder of Constrained Capital, said that with the arrest of FTX founder Sam Bankman-Fried on...
www.reuters.com
ESG Orphans in Kiplinger's:
Anti-ESG feature. Others mentioned. But $ORFN isolates entire ESG factor. Not sector-based, but rules-based. ESG capital constraints our North Star. High expected return securities excluded from decade's biggest factor, ESG.

ETF Funds for Anti-ESG Investors
A new crop of anti-ESG ETF funds offers an alternative to investments that focus on environmental, social and corporate governance issues.
www.msn.com
@ChrisCarosa Great article Chris.
ESG thoughts:
(A) It's personal. No universal ESG "goodness."
(B) Someone else can't "do" your ESG. Larry Fink not the arbiter.
(C) Do folks tell ESG truth? Higher costs, lower returns, higher risks.
(D) "ESG" stamp not a risk panacea. See Russia, FTX, SVB.