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May
9
Ida Hansen
3 Takes from the Stanford University Ban on Coal Investing
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Stanford University recently decided to ban investments in the coal sector.

According to a statement from the President of Stanford University, John Hennessy, “Stanford has a responsibility as a global citizen to promote sustainability for our planet, and we work intensively to do so through our research, our educational programs and our campus operations.  The university’s review has concluded that coal is one of the most carbon-intensive methods of energy generation and that other sources can be readily substituted for it. Moving away from coal in the investment context is a small, but constructive, step while work continues, at Stanford and elsewhere, to develop broadly viable sustainable energy solutions for the future.”

Investors should take three things from this move by Stanford University.

There will be more by other colleges and universities.  Institutions of higher learning are at the vanguard of social movements.  That is especially true for the environment and global warming.

This is more bad news for.  The entire sector has already been hit hard by “The War on Coal” from The Obama Administration.  Market Vectors Coal (NYSE: KOL), the exchange traded fund for the industry, is down nearly 14 percent for the last year of market action (chart below).  Peabody Energy (NYSE: BTU), considered by many to be the best in the industry, is down more than 10 percent for the last 52 weeks of trading.

Mainly, investors should not abandon the sector.  Coal is the most widely used fuel source.  That will not change due to the nature of the demand for energy emanating from emerging market companies, especially China and India.  Market Vectors Coal and Peabody Energy should still do well due to the demand from abroad.  BHP Billiton (NYSE: BHP), the largest natural resources company in the world, has coal activities in its portfolio.

Investors should not abandon the coal sector as it is the most affordable fuel source.



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