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Here’s how Impactive Capital could apply ESG ideas at student lender SLM

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Company: SLM Corp. (SLM)

Business: SLM originates and services private education loans to students and their families to finance the cost of their education in the United States. It also offers retail deposit accounts, including certificates of deposit, money market deposit accounts, and high-yield savings accounts. In addition, it serves students and families through financial aid, federal loans, and student and family resources.

Stock Market Value: $5.3B ($18.25 per share)

Activist: Impactive Capital

Percentage Ownership:  5.54%

Average Cost: $15.06

Activist Commentary: Impactive Capital is an activist hedge fund founded in 2018 by Lauren Taylor Wolfe and Christian Alejandro Asmar. Impactive Capital is an active ESG (AESG) investor that launched with a $250 million investment from CalSTRS and now has over $2 billion. In just three years, they have made quite a name for themselves as AESG investors. Wolfe and Asmar realized that there was an opportunity to use tools, notably on the social and environmental side, to drive returns. Impactive focuses on positive systemic change to help build more competitive, sustainable businesses for the long run. The firm will use all the traditional operational, financial, and strategic tools that activists use, but will also implement ESG change that they believe is material to the business and drives profitability of the company and shareholder value.

What’s Happening?

Impactive Capital has reported a 5.54% interest in SLM for investment purposes.  

Behind the Scenes

SLM is a unique, high-quality business in the financial sector with a niche focus on student loans. There is a very negative perception in the marketplace for government-backed or implicitly guaranteed loans. However, SLM has not made government-backed student loans since 2010. In 2014, the company spun off that entire business as Navient Corporation. Since 2014, SLM has been issuing private student loans that they underwrite and for which they assume the risk. As a result, they have a very healthy loan portfolio with 86% of the loans co-signed by a parent of the student, average FICO score of approximately 750 and a 1% loss rate.

Impactive has owned this stock since their very first 13F filed for the fourth quarter of 2019, and likely longer than that. This is an incredible core business and should continue to grow if management focuses on it and gets out of non-core projects. That is exactly what management is doing with a CEO who not only knows how to efficiently run a company, but really understands capital allocation and how that drives shareholder value. So, the company generates loans, sells the loan book for 105-109 cents on the dollar, and uses proceeds to generate new loans and buy back shares — rinse, repeat. This process is just going to increase annual earnings and shareholder return.

Impactive always has an ESG thesis in each of their investments and this is no exception. While this is not necessarily a situation where Impactive will take a board seat, we expect this to be a situation where Impactive is heavily involved with the company and one in which they will be able to implement AESG activism that is consistent with their investment thesis: using ESG to drive value creation and profitability.

By its very nature SLM is a high “S” company as it provides loans to students to get a higher education. But there is even more they can do working with this demographic and we expect Impactive to work with them on ESG initiatives. For example, many companies today, such as Warby Parker, have give-get programs where charitable contributions are made in direct relation to business generation. SLM presently donates to charity but can do more in a way that will help its business. For example, they could give a percentage of every loan they generate to a charity of the borrower’s choosing. This has obvious benefits to society, but also to the company. It is the type of thing that resonates with the demographic of the company’s borrowers, it will strengthen the relationship between the company and the borrower, and it will give it a marketing advantage over competitors who do not do this. Moreover, it makes the loans stickier as borrowers would be less likely to refinance, which makes the loans more valuable to the lender.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.



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OPEC+ to consider oil cut of over than 1 million barrels per day

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OPEC+ will consider an oil output cut of more than a million barrels per day (bpd) next week, OPEC sources said on Sunday.

Omar Marques | SOPA Images | LightRocket | Getty Images

OPEC+ will consider an oil output cut of more than a million barrels per day (bpd) next week, OPEC sources said on Sunday, in what would be the biggest move yet since the Covid-19 pandemic to address oil market weakness.

The meeting will take place on Oct. 5 against the backdrop of falling oil prices and months of severe market volatility which prompted top OPEC+ producer, Saudi Arabia, to say the group could cut production.

OPEC+, which combines OPEC countries and allies such as Russia, has refused to raise output to lower oil prices despite pressure from major consumers, including the United States, to help the global economy.

Prices have nevertheless fallen sharply in the last month due to fears about the global economy and a rally in the U.S. dollar after the Federal Reserves raised rates.

A significant production cut is poised to anger the United States, which has been putting pressure on Saudi Arabia to continue pumping more to help oil prices soften further and reduce revenues for Russia as the West seeks to punish Moscow for sending troops to Ukraine.

The West accuses Russia of invading Ukraine, but the Kremlin calls it a special military operation.

Saudi Arabia has not condemned Moscow’s actions amid difficult relations with the administration of U.S. President Joe Biden.

Last week, a source familiar with the Russian thinking said Moscow would like to see OPEC+ cutting 1 million bpd or one percent of global supply.

That would be the biggest cut since 2020 when OPEC+ reduced output by a record 10 million bpd as demand crashed due to the Covid pandemic. The group spent the next two years unwinding those record cuts.

On Sunday, the sources said the cut could exceed 1 million bpd. One of the sources suggested cuts could also include a voluntary additional reduction of production by Saudi Arabia.

OPEC+ will meet in person in Vienna for the first time since March 2020.

Analysts and OPEC watchers such as UBS and JPMorgan have suggested in recent days a cut of around 1 million bpd was on the cards and could help arrest the price decline.

“$90 oil is non-negotiable for the OPEC+ leadership, hence they will act to safeguard this price floor,” said Stephen Brennock of oil broker PVM.



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Avoid these 5 activities during a thunderstorm, says meteorologist

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When it’s raining outside and thunder follows, it’s likely that lightning is pretty close behind and there are some places you shouldn’t be for your own safety — mostly outdoors.

“When thunder roars, go indoors and stay there for 30 minutes after the last clap of thunder,” the National Weather Service advises in its lightning safety rules. The greatest potential harm during a thunderstorm is lightning.

You might think getting struck by lightning is only possible if you’re outside, and that you’re completely safe as long as you’re at home, but that isn’t always the case, according to the Centers for Disease Control and Prevention.

The agency reports that “about one-third of lightning-strike injuries occur indoors.”

And while you may have seen advice against showering during a thunderstorm trending in the news, there are other activities you should avoid doing at home until after a storm passes as well, according to John Homenuk, a meteorologist and founder of New York Metro Weather.

5 activities to avoid at home during a thunderstorm

Homenuk, the National Weather Service and the CDC all recommend avoiding doing these activities at home during a lightning storm:

  1. Taking a shower
  2. Washing dishes
  3. Standing near windows, doors, porches and concrete
  4. Touching electronic equipment connected to an electrical outlet (i.e. computers, laptops, game systems, washers, dryers or stoves)
  5. Using corded phones

Stay away from water

As a starting point, Homenuk warns against being near or in water during a thunderstorm.

Showering, bathing or washing dishes can all pose a risk if lightning is occurring near your home.

“When lightning happens, it generally travels on the path of least resistance, which is often going to take it into metal which can go through the pipes,” he says. “And obviously that would not be great if you were in the shower.”

The CDC states that the risk of lightning traveling through your plumbing is lower for those with plastic pipes as opposed to metal pipes.

However, the agency still advises you to “avoid any contact with plumbing and running water during a lightning storm to reduce your risk of being struck.”

Washing dishes may pose a lower risk than taking a bath or a shower because your whole body isn’t submerged in water or standing directly under a metal showerhead as the pipes are running, says Homenuk.  

“But still, generally if you can, you [should] wait for the storm to pass instead of utilizing the water and the pipes that can be a pathway for that electricity to travel,” he notes.

These are the safest places to be indoors and out

This 25-year-old makes $100K a year as a solar roof installer in Linden, New Jersey



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The 10 least popular U.S. states to move to in 2022

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A recently released report, moveBuddha, a relocation tech company, ranked the least popular states to move to in 2022.

The 2022 Mid-Year Migration Report used data collected from January 1 to July 5, 2022, via the company’s moving cost calculator.

moveBuddha compared the inflow to the outflow of people state to state to see which places are gaining new residents and which are losing their current population.

No. 1 least popular state to move to in 2022: New Jersey

In-to-out ratio: 0.50

New Jersey topped the list of least popular states. According to the report, the Garden State is losing the most residents compared to those moving in.

Residents in the East Coast state pay the country’s highest property taxes, which may account for the loss in population.

The two other states that make up the New York metropolitan area — New York and Connecticut — are experiencing similar challenges as New Jersey.

Both made the list of states that people are moving out of more than they’re moving in, at no. 4 and no. 5 on the list respectively.

The 10 least popular states to move to in 2022:



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