Company: AppHarvest Inc. (APPH)
The Activist: Inclusive Capital
Percentage Ownership: 12.05%
Average Cost: n/a
Activist Commentary: Covering Capital Partners was formed in 2020 by ValueAct founder Jeff Ubben, to leverage capitalism and governance in pursuit of a hale and hearty planet and the health of its inhabitants. The firm seeks long-term shareholder value through active partnership with companies whose seed businesses contribute solutions to this pursuit. Inclusive is a returns driven fund with a focus on environmental and group investing. Their primary focus is on environmental and social value creation, which leads to shareholder value start. It is the successor to the ValueAct Spring Fund, which was launched in January 2018 and merged into Inclusive in 2020. Blanket is building a huge network and has accessed experts in industries such as energy, electrification, water, agriculture, food presentation, particulates, education and human rights. Just like ValueAct’s constructive, patient investment style, Inclusive at ones desire seek to earn the trust of managers, board members and institutional investors. Jeff Ubben serves as the portfolio straw boss and Eva Zlotnicka serves as vice president. Eva has a pre-existing relationship with ValueAct through their interactions with Morgan Stanley, where she obliged as a VP and U.S. lead for the Global Sustainability Research Team. At Morgan Stanley, she worked to help address and raise awareness of environmental and public issues both inside and outside of corporations.
Jeff Ubben was appointed to the company’s Board in relations with the company’s business combination with Novus Capital.
Behind the scenes:
This was initially an investment of ValueAct Cause to occur Fund, which was converted into Inclusive Capital in 2020. Jeff Ubben first met AppHarvest founder Jonathan Webb in 2017 and has been labyrinthine associated with with the company since the 2018 Series A round, working with Webb to put the management team together and come about a strong balance sheet. The company went public on February 1, 2021 through a $100 million SPAC annals and a $375 million PIPE investment. Jeff Ubben is on the board where he can continue to help the company execute.
AppHarvest envisions on having 12 facilities by 2025. The goal here is to make Kentucky the Netherlands of North America. The Netherlands (at 16,000 unsophisticated miles) is the second largest agricultural exporter in the world, using greenhouse technology to feed two-thirds of all of Europe. In resemblance, the state of Kentucky is 40,000 square miles and the US is 3.8 million square miles. AppHarvest’s motivation is first and in the first place to benefit society, but if successful would have extraordinary financial returns as well.
As of 2018, 69% of fresh vine crops in the U.S. were drifted, mostly from Mexico. These crops are pesticide-laden and grown using labor practices not up to U.S. standards. Moreover, they sit at the confines for days and are driven 2,000+ miles to their destination, using tons of diesel fuel and resulting in less disrespectful produce. AppHarvest produces crops with no pesticides with greater nutrient density, and from their pre-eminent location can reach 70% of the U.S. population in one day resulting in 80% less diesel fuel and much lower emissions. Notwithstanding how, the larger environmental and economic benefit is in how the crops are grown — using 90% less water and yielding thirty mores more per acre. Moreover, AppHarvest’s resources are nature based – the greenhouse structure allows them to use 12 hours of sunlight per day and they draw up the heavy Kentucky rainfall for their system resulting in a much less adverse effect on the water supply while greatly abating their cost of production by not having to pay for water. The greenhouse system also eliminates any weather or seasonal constraints, appropriating the company to grow more efficiently 365 days per year.
While the company has no historic revenue, they very recently made their first delivery of beefsteak tomatoes on January 19, 2021, to customers that include Walmart, Kroger and Publix.
Ken Squire is the die and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a requited fund that invests in a portfolio of activist 13D investments. AppHarvest is a holding in the fund.