Sunday, December 23, 2007

Tanzanian fish in your holiday marshmallows. Yuk.

One of the more disturbing moments I had this holiday season was when a package of marshmallows we purchased for holiday hot chocolate turned out to contain the African fish nile perch in them. The brand was Elyon's from Israel, but on sale through some sites like Amazon and iGourmet. Well, at least they're kosher.

This is especially disturbing if you have seen the movie Darwin's Nightmare.
Nile perch is an invasive fish that has caused the extinction of many other native species and completely disrupted the ecosystem. The movie uses the lens of the fishing industry to look at many of Africa's social ills, from AIDS to prostitution to orphaned children to globalization to war.

In short, in the film you can see that the perch is destroying the ecosystem. Meanwhile, Europeans are eating this fish, which has freakishly large, flaky fillets by the ton. And where's the money going? Indian factory owners, European importers and drunken Russian pilots. Oh, and European arms dealers, because that's what is coming in on the supposedly "empty" planes from Europe that pick up the fish. You have to watch Darwin's Nightmare to believe it.

So how's that for a cup of holiday cheer? I don't think I'm asking all that much when I suggest you boycott marshmallows with Tanzanian fish that is emblematic of an entire continent's exploitation.

Don't believe the Nile Perch is a freak? Check out this pic from an African fishing site.

Pax World Women's Fund

Now here's an interesting concept I didn't know about: The PaxWorld Women's Fund.

Here's their statement on how they do it:

"The Pax World Women’s Equity Fund will invest in companies that promote gender equality by advancing women to top executive positions, have female representation on the board of directors and in senior management and promote positive images of women in their advertising, promotion and marketing. The Fund will avoid investing in companies involved in the exploitation and trafficking of women, whose products demean women or who use negative stereotypes in their advertising, promotion or marketing, that fail to provide a safe work environment for women by encouraging or tolerating harassment, and that have a history or pattern of discrimination or mistreatment of women."

What you end up with is an interesting portfolio of stocks that's certainly a little bit different from your typical large cap fund:

Nokia OYJ, ADR
T Rowe Price Group, Inc.
Illinois Tool Works, Inc.
Microsoft Corp.
Costco Wholesale Corp.
Nike, Inc., Class B
Procter & Gamble Co.
Apache Corp.
PepsiCo, Inc.

As presently constituted, it's a pretty intriguing portfolio, but the expense ratio of 145 bps (170 gross of rebates) is pretty high for a large cap play. And the performance hasn't been there, as of Q3 2007, the 3 and 5 year numbers were in the bottom quartile. My suggestion is to take a look at some of these companies as investment ideas as opposed to buying the fund.

Saturday, December 22, 2007

Lions/Cowboys Thanksgiving Day game was carbon neutral...

I was reading more about NFL teams going carbon neutral, and found this interesting article in the Solar Daily about the Lions Thanksgiving Day game versus the Cowboys this year was the first fully carbon neutral NFL event. The article has some of the details about how they pulled it off. Pretty interesting. Now if only we could get 35,000 cars going to these games to be environmentally friendly.

Maybe I'll root for the Lions the next time I'm watching a game that I normally would be neutral on.

Detroit Lions, New England Patriots and New Jersey Nets are green

Not that I need any more reason to root for the Patriots, but in ESPN The Magazine, the Detroit Lions, New England Patriots and New Jersey Nets were mentioned as teams that have green initiatives going.

According to the snippet by Charles Curtis, the Lions and Patriots are carbon neutral by paying to offset the their energy usage.

Taking it one step further, the Nets are working on cutting energy usage at their home stadium to try to become truly carbon neutral. They are paying for what they can't reduce.

These are noble goals and more franchises should be working for environmentally friendly goals. Professional sports is often full of excesses and this is a nice step in the other direction. I think one of the biggest reasons is how many people (particularly men and business leaders) these franchises are admired by. This is a great example they are setting.

Thursday, December 20, 2007

Amazon Kindle...a quantum leap in electronic reading?

I actually prefer to read things on screen rather than in books. Anyone who has almost hit me with their car or bike on my walk to school knows that I read constantly. I read a lot on phone, but that's generally web articles and a little painful. In low light, it's nice to have the lit screen and no pages to turn, especially if you've ever seen me fumbling around with The Economist crossing North Washington Street. The problem is the small amount of content you can get on one page, the constant scrolling and the lack of a standard format for content.

I've been interested in getting a portable or wireless reading device for some time now and I knew that Amazon had a product in the pipeline.

And here it is...Kindle: Amazon's New Wireless Reading Device

Well, looks like a good start, especially the reasonable charges for books and the availability of content. Plus, it saves paper, which is a huge plus for people like me, especially considering I read no less than 8 magazines a month. $400 is steep though. The future of reading is going to be a model like this, but the price is a little high for me to be a first adopter. I probably wouldn't have said that if I wasn't a student though...

Tuesday, December 18, 2007

NanoSolar releases first panel...and is major structural change in the energy industry brewing?

With the announcement that the Google founders backed Nanosolar has released their first thin film solar panels, I came to an interesting realization about investing in GreenTech today about the risk profile of Green Tech.

That is that it seems likely there are going to be dominant winners and essentially losers. It could be that one set of patents will heavily dominate the IP for Green Tech. This will be a fundamental shift in the entire energy business, and it could be the certain energy companies and technology providers become essentially obsolete.

Nanosolar's goal is to sell solar for about a dollar per watt. This is based on lowering the manufacturing costs and the cost to implement the delivery of solar power. Whether or not it's these guys (who certainly have the right backers in terms of dollars and influence), it's going to be someone.

It may be that a winner will emerge soon. Maybe this is why you see companies like NStar funding $200,000 energy innovation prizes. There's gonna be some real big winners and some real big losers.

Sunday, December 16, 2007

BusinessWeek article on IvyPlus use of returns

Here's the BusinessWeek article where many of the sentiments in the last post followed from.

It's not just responsibly investing the money, it's how you use the returns. There's no open and shut right and wrong here. At the end of the day, a business approach has helped take many of these schools to the top and keep them there. By building better dorms (Whitman at Princeton) and better student centers (like Stata at MIT), they can edge out other elite schools for top students. You've got to show well.

What schools should be judged on, prestige, rankings, research output, quality of education...those who make the donations get a lot of say in that. I think down the road, if it happens that I do allright for myself, I will not leave it entirely to the discretion of Swarthmore or MIT on how to invest that money...

Saturday, December 15, 2007

Ivy Plus - are they responsibly investing returns?

Last week, I heard a very interesting talk by Antoinette Schoar, an MIT finance professor about how a bottoms up approach to private equity asset allocation has supercharged Ivy plus (Ivy League schools plus MIT and Stanford). This was a pretty interesting talk, and at some point, it may merit its own discussion.

I have some personal qualms about how schools are investing this money. For instance, at MIT, the Stata Center is a folly of ostentation. While it's beautiful, it was very expensive, and it innumerable problems resulting from shoddy design and complex construction. Princeton is investing in a showpiece dorm (Whitman). Schools like CalTech and my undergraduate alma mater, Swarthmore) are implementing a new program which enhances tuition packages to the upper middle class.

Meanwhile, the gulf between the rich schools and everyone else is growing greater. That increases the responsibility of the wealthy ones to invest it their returns responsibly. It follows that it becomes a question of what they believe is responsible. In general, my opinion financial aid should go to research and increase access of education to those who need it, minority, the poor, leadership in non-profit and developing nations, for instance. It's more dubious as to whether a supercharged dorm or post-modern art rendition of a student center is a useful way to spend that.

Friday, December 14, 2007

Fast Company - 50 Ways to Green Your Business

One of the better articles I've run into in my reading is this one from Fast Company with 50 tips on how to green your business. It's good to see some of the companies in here: General Mills, Ford, UniLever, etc. that are taking a proactive approach. Of course, there's business and brand value involved in these initiatives too.

Earlier this year, I heard Charlie Brown, the Director of Corporate Social Responsibility for Nike speak at MIT. Nike was one of the first companies to get that in the cases where you can create business value with sustainability initiatives. Nike's initiatives have allowed them to lower risk and protect brand value. The Fast Company article is partly illustrative of why if the companies you are investing in aren't thinking about green initiatives, they are potentially missing out on some opportunities to improve profits.

Thursday, December 13, 2007

FT article on responsible investing

Interesting article in the FT called "Reducing risks by going green".

You don't exactly get a warm and fuzzy feeling about the motives of private bankers and high-net worth fund managers, but I suppose you shouldn't expect to. They're just doing their jobs. But the article does illustrate how by investing responsibly, you can improve returns and lower overall portfolio risk.

Tuesday, December 11, 2007

More on Powershares CleanTech (PZD)

This is a link to Powershares CleanTech Fund . It's instructive to take a look at its composition. Besides my bullish opinion on CleanTech, it's also a nicely diversified portfolio of companies, which limits to cyclical and industry risk to a certain extent (though not entirely, obviously). PZD invests in machinery, semi-conductors, equipment, energy services and chemicals (between 7 and 19%) in each, so it's not purely solar companies or utilities that you might imagine when you buy a fund like this.

The expense cap is 60 basis points, which is fair for specialty fund holding a lot small and mid-cap stocks. Of course, since it's an ETF, having to pay a trade charge when you get in and out stings a bit.

My only concern is that I'm late to the game on this one. The biggest holding is First Solar, which has recently done extremely well. The portfolio has done extremely well this year. Performance and cash in-flows are both strong thus far. With the demand for energy and the continued interest of investors, I don't think this is a bubble. While returns probably won't be as high as they have been this year, Clean Tech is a bet I like.

Of course, I'd love to hear your thoughts on this fund!

Getting to Green

This blog will follow my journey as I move from a standard retirement portfolio full of boring auto-pilot Fidelity mutual funds to a more ethical, dynamic portfolio. At the same time, I'll be a launching a website that will help personal investors research how socially responsible companies are.

Currently, my portfolio consists of 28 funds. 23 are Fidelity, with a smattering of other funds I like. I use Fidelity for indexing (40%), International investing (including a lot of indexing) and sector bets. This year, my two sector bets were Gold and Health Care, both of which have worked out very well. As some of these bets expire, I'm going to actively look for ethical investments (funds and stocks) that I believe also have strong return potential.

The first move that I'm making is an idea I got from Jim Lowell of Forbes Magazine. I'm picking up Powershare CleanTech (PZD), an ETF currently trading at $34.64. Today was a terrible day on the market with the Dow down 294 points so with the free cash from selling out of gold at an all-time high last week, I'm going to buy PZD. This provides some exposure with balanced risk to a key sector. I'm very bullish on GreenTech.

Forbes, focused around leading analyst Richard Keiser, provides some reasons as to why. But it's not just Keiser. It's high energy prices, plus what I see as a continued huge capital inflow into GreenTech that excites me. Being at MIT, you can see how evident this trend is. VCs can't throw money fast enough at any viable GreenTech idea.