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Al Gore and James Cameron better watch their backs

October 29, 2010

The moral conundrum of being an environmentally conscious hedge fund manager must be difficult.  On the one hand, you oppose the repeal of California’s Global Warming Solutions Act, on the other you are beholden to your shareholders to actually make money.  That is the predicament in which Thomas Steyer finds himself as the upcoming elections in California draw near.

Thomas Steyer is the manager of the hedge fund Farallon Capital Management.  He is also the largest contributor to committees campaigning against Proposition 23, donating $2.5 million to the cause.

Some history behind the bills in question are in order.  The Global Warming Solutions Act of 2006 (AB 32) was passed by California with the goal of returning California to the global warming gasses emission levels of 1990 by the year 2020.  Some of the measures to help achieve this goal are green cars, green buildings, the renewable electricity standard, oh, and a cap-and-trade program.  That’s right, California is on a time-line to implement a cap-and-trade program set to start in 2012.

Proposition 23, a ballot initiative, will freeze The Global Warming Solutions Act until the unemployment rate in California drops below 5.5% for 4 consecutive quarters.  The current unemployment rate in California is 12%.  The proponents of the initiative rightly asserting the deleterious effects of environmental legislation on the economy and thusly on jobs.

So Mr. Steyer is dropping some major coin to stop proposition 23, but he does this in the face of some of the larger holdings in his hedge fund, like Carrizzo Oil, Energy Partners LTD. (an oil company focused on drilling in the gulf), and Freightcar America.

On the other hand, his hedge fund has much more substantial holdings in companies like Yingli Solar, a Chinese solar panel production company.  Or Millipore, a company that builds air quality measurement devices.  Those two companies alone are the #1 and #3 largest holdings respectively.

So is he just doing what he does best, hedging his bets?  Maybe, but I will point to one more holding that should drive this man’s hypocrisy home.  MSCI Inc. provides research on numerous things including Climate Risk Management, advocating among other things, socially responsible investing.

I think Mr. Steyer would fail the test for socially responsible investing.  Just another environmental hypocrite in the hen-house.  Watch out Al Gore and James Cameron, you guys have an up-and-comer nipping at your heels.

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