Divestment Delusions Part Deux: Trillions Under Management

Guest ridiculing by David Middleton

This is sort of a sequel to yesterday’s post about “Weepy Bill.” How often have you seen grandiose statements like these in moronic articles about fossil fuel divestment movements?

$8 trillion worth of assets under management (AUM) is a lot of money… Right?

ExxonMobil is one of the largest, most successful, best-managed climate wrecking corporations in the world. How do the divestment delusions compare to ExxonMobil?

Top Institutional Holders
Holder Shares % Out  Value ($)  AUM ($ trillions)
Vanguard Group, Inc. (The) 326,288,519 7.71%   26,661,034,588                           5.1
Blackrock Inc. 265,206,204 6.26%   21,669,998,686                           6.3
State Street Corporation 207,623,330 4.90%   16,964,902,104                           2.8
Northern Trust Corporation 55,890,222 1.32%     4,566,789,988                           1.2
Bank Of New York Mellon Corporation 54,101,360 1.28%     4,420,622,076                           1.9
Capital Research Global Investors 54,070,428 1.28%     4,418,094,622                           1.9
Geode Capital Management, LLC 47,771,187 1.13%     3,903,383,646                           0.4
Bank of America Corporation 45,555,147 1.08%     3,722,311,019                           1.1
Norges Bank Investment Management 39,326,509 0.93%     3,304,213,154                           1.0
State Farm Mutual Automobile Insurance Co 37,126,800 0.88%     3,033,630,794                         13.0
Total 1,132,959,706 26.77%   92,664,980,677                         34.7
Average 113,295,971 2.7%     9,266,498,068                           3.5

(Table edited because I included the totals in the averages… D’oh!)

One of the standard tools in the environmental fraudster bag of tricks is to present facts and numbers without any meaningful context; that’s why articles like this make me laugh my @$$ off…ExxonMobil’s 10 largest institutional shareholders have $34.7 trillion in assets under management (AUM), combined they only control 27% of XOM’s shares, none of them are government entities, churches or government employee pension funds.  They average $3.5 trillion in AUM.  Weepy Bill’s 1,000 have a total of $8 trillion under management, an average of $8 billion in AUM.

DECEMBER 16, 2018

Shareholders call on ExxonMobil to set greenhouse gas reduction targets

NEW YORK (Reuters) – A number of institutional investors in ExxonMobil Corp (XOM.N) have said they will file a shareholder resolution which calls on the world’s largest oil company to set targets for lowering its greenhouse gas emissions.

The call, led by the New York State Common Retirement Fund (NYSCRF) and the Church Commissioners of England (CCE), comes in the wake of shareholder moves at other major energy firms seeking to make them more responsive to climate change and its impact on the business.

[…]

The NYSCRF and CCE are joined in the latest initiative, which will be filed for a potential vote at Exxon’s shareholder meeting in the spring of 2019, by other funds including the California Public Employees’ Retirement System (CalPERS), and HSBC Global Asset Management, the statement added.

[…]

Reuters

How many of ExxonMobil’s largest institutional investors are mentioned in this article?

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ResourceGuy
December 19, 2018 6:41 am

It’s called index investing. duh

Shmiley
Reply to  ResourceGuy
December 19, 2018 12:03 pm

It’s called Peak Oil, duh.

John Endicott
Reply to  Shmiley
December 20, 2018 7:39 am

In the case of divestment “hitting them where it hurts” it’s called Peak Stupidity, duh.

Barbara
Reply to  John Endicott
December 20, 2018 6:15 pm

UNSDSN

“Pathways to deep decarbonization”, 2014 Report, 232 pages

There are about 15 countries in this report including Canada, Mexico, USA. Each country has a section in the report.

Decarbonization just another means of divesting from fossil fuels and switching to renewable energy sources.

http://unsdsn.org/wp-content/uploads/2014/09/DDPP_Digit_updated.pdf

There are two additional UNSDSN Decarbonization reports published in 2015 and 2018. Also available online.

UNSDSN is a UN High Level Panel launched in August 2012.

WR
December 19, 2018 6:46 am

Divesting from a publicly traded, dividend paying stock does nothing except maybe giving a discount to other investors, and improving their dividend yield. Thanks guys!

D
December 19, 2018 7:10 am

Ummmm….someone check the math please…[pruned]

[Single letter login-id’s are not permitted. Use a proper login_id and re-submit. .mod]

Ken Irwin
December 19, 2018 7:17 am

I remember one of my children carrying bucketloads of water from one side of a jetty to the other in a futile attempt to lower one side and raise the other.

It was hysterical – as is this stupidity by grown men.

Bruce Cobb
December 19, 2018 7:26 am

Divestment is the ultimate in virtue signaling. It has zero effect on the targeted companies, and zero effect on “carbon” emissions, much less on climate. But it sure makes the virtue signalers feel good, and look good in the eyes of fellow Believers.

LdB
December 19, 2018 7:27 am

I think that is all that is left for eco-warriors to try and put a positive spin on pointless and meaningless stunts. It was a bit like COP24 they cobbled an agreement together which couldn’t even get a good run on MSM because even they knew it was just junk.

Walt D.
Reply to  LdB
December 19, 2018 8:14 am

Don’t overlook the perks – a trip to Paris – $200 bottles of champagne, $500 meals at restaurants like the Tour d’Argent, with someone else paying for it.

Greg Woods
Reply to  Walt D.
December 19, 2018 8:37 am

so there is a free lunch, after all…

John Endicott
Reply to  Greg Woods
December 19, 2018 11:14 am

There’s always a free lunch to be had when it’s other people’s money paying for it.

Walt D.
December 19, 2018 7:32 am

In the extreme, if the price of ExxonMobil drops below a certain threshold, ExxonMobil will just buy back the stock. The dopes in this case would be selling their stock back to ExxonMobil at a discount.
There is always someone waiting to take advantage of their stupidity.
Look at Warren Buffet’s casualty insurance companies who cashed in on the wrong predictions after hurricane Katrina.

MarkW
December 19, 2018 7:41 am

There are reasons why funds invest in any stock. (Not in any particular order)

1) Diversification – Insulates your fund from shocks that hit an individual company or industry
2) Stability – The stock doesn’t swing wildly
3) Profitability – Over time, the stock either grows in value or produces a steady stream of dividends.

By declaring that you will not invest in a particular company or industry, the fund managers are foregoing these advantages. Should there be a problem with the fund in the future, the managers are leaving themselves open to a lawsuit.

Tom Halla
Reply to  MarkW
December 19, 2018 8:08 am

And many of these virtue signaling entities have a fiduciary relationship with the pensioners or whomever their investments are supposed to benefit. Following this sort of divestment plan could very well lead them to court.

MarkW
Reply to  Tom Halla
December 19, 2018 10:39 am

I strongly suspect that all of these entities have a fiduciary duty to maximize the value of the funds they manage.

Alan Watt, Climate Denialist Level 7
December 19, 2018 8:31 am

Thanks David. Another enjoyable and informative read.

Reasonable Skeptic
December 19, 2018 9:20 am

This is how activists bullshit.

Climate scientists say…
Shareholders call….

Translations:
A couple of guys with Ph D’s say…
A few people that own shares say…

Whenever I see “Broad Group ask/want/think/call for” I immediately think “activist bullshit”. I am never wrong.

kent beuchert
December 19, 2018 9:35 am

These greenies remain confused about energy. If they really wanted to transition to low carbon electrcity production, they would demand subsidies for new nuclear that is both cheaper than anything out there and can be installed rapidly by factories, namely molten salt small modular reactors. But instead they demand an oil company to get into the renewable energy scam. Note that they don’t seem to bother all those other hundreds of energy companies that are providing natural gas or coal generated power. Some oil companies are installing some (few) windmills and advertising the fact, presumably to avoid being targetted. Of ourse, oil companies themselves don’t burn any fossil fuels, other than those required to extract the oil from the ground from wells they control. Bilions of gas powered car owners will demand and get their gasoline from somebody – if not Exxon, then from another oil company, so ridding the world of one oil company would,at best, reduce competition a small amount, since the oil business is one of the most competitive businesses one can get into.

John Endicott
Reply to  kent beuchert
December 19, 2018 11:13 am

In the immortal words of Ronald Reagan “There you go again”. While Wind and solar and known quantities (we have plenty of real world examples to judge their qualities on) molten salt small modular reactors are vaporware. There currently are none in operation for anyone to make a valid judgment on their qualities. Your constantly banging on about how great they are doesn’t change the fact that they are not great by virtue of the fact that they don’t exist in real world operation. How about getting just *one* into real world operation so that potential investors can see exactly what it is you want them to invest in.

Coeur de Lion
December 19, 2018 9:46 am

As elsewhere I mention my spat with the Bishop of Salisbury who leads for the Synod of the Church of England on environmental matters and approves the Synod’s disinvestment decision. Just virtue signalling at the expense of their pension fund which has not been well managed for years. And His Grace is contemptuous of my arguments and believes that the IPCCs recent 1.5 degrees paper is the way ahead for the planet. He hasn’t read it of course. Pity the poor of the world dying through lack of electricity. My Church does’t.

DD
December 19, 2018 9:56 am

resubmitting again per request, but it would have been easier for David M to just correct the error per my first comment submitted…it appears he has included his total line when he has calculated his average…so his reported averages are double the values they should be…

Russ R.
December 19, 2018 10:38 am

Somehow Bill does not understand the difference between ownership in a company and selling a product to a customer?? How dumb do you have to be, to think that selling stocks to another buyer impacts whether that company is going to continue doing the business, that made investors wealthy to begin with?? Bill thinks plumbing the depths of ignorance, and publicly announcing it, is a worthwhile way to spend his time.
Here is an idea that will work Bill, if you have the stones to do it: Refuse to be a customer!! Get all your buddies together and boycott the products!!
That will actually get their attention if you can do it, in sufficient numbers. I give 100:1 odds that you won’t, but yet you recommend it to the rest of us, through government coercion.
Stupid ideas, leading to stupid actions, is no way to live your life.

John Endicott
Reply to  Russ R.
December 19, 2018 11:19 am

Indeed, if the weepy one really wants to “get them where it hurts” then he needs to stop giving them money by no longer buying their product and convince others to do the same. Selling your shares of their stock to someone else doesn’t do a damn thing to the company, whereas people no longer buying their product affects the company’s bottom line.

DeLoss McKnight
December 19, 2018 11:22 am

Why stop at just stocks that produce fossil fuels? Aren’t the companies that create the demand for such fuels just as culpable? Why not just divest from all of them? I guess because if they did, they would have literally nothing to invest in. Another ironic thing about this Don Quixote adventure is that if they succeeded in stopping all fossil fuel production, the world economy would crash and they would be literally starving in short order.

MarkW
Reply to  DeLoss McKnight
December 19, 2018 12:36 pm

I want to start a new movement, demanding that liberal universities divest from the their pension and endowment funds any industry that uses fossil fuel. Divesting from just oil and gas companies is for wimps. Go whole hog.

Greg Cavanagh
Reply to  MarkW
December 19, 2018 2:25 pm

If anyone could go off-grid, it should be the universities. They’ve got all the smarts.
Let them lead by example, develop the tech, proof of concept and all.

Steve O
December 19, 2018 11:43 am

So, $6 trillion of the world’s $300 trillion of financial assets are in funds where the managers have sworn off investing in fossil fuels. This is called niche marketing.

peter klein
December 19, 2018 12:13 pm

under “Top Institutional Holders”, you name only 10, not 11

John Endicott
Reply to  David Middleton
December 20, 2018 5:16 am

Bridgekeeper: what is the number of top institutional holders?
David Middleton: Eleven, —no! [David Middleton goes flying over the edge of the bridge] Teeeeeeeennnnnnn!

(with Apologies to Monty Python)

Alexander Vissers
December 19, 2018 12:34 pm

Stock now owned by the Russians, Saudi’s and Chinese?

Ian Macdonald
December 19, 2018 10:08 pm

I lost money on stocks held in a Legal & General fund. They did quite well until they got involved in divestment, the returns and value slumped. Transpired they were even bullying companies they held stocks in to engage in climate activism, on pain of withdrawing funds.

That ought to be a crime. In fact it almost certainly is. AFAIUI, shareholders are not allowed to bully companies into supporting political campaigns. Unfortunately the ombudsman wouldn’t investigate it.

When I get around to it I’ll put a writeup on my blog.

John Endicott
Reply to  Ian Macdonald
December 20, 2018 7:31 am

Sounds like grounds for a class action lawsuit. Best of luck

Peter
December 19, 2018 10:26 pm

I support divestment. May make the share cheaper, so that I can buy cheaply. Divestment campaigns can identify stocks that are run for the benifit of shareholders.

John Endicott
Reply to  Peter
December 20, 2018 7:36 am

I only support divestment for companies/funds that are *not* managing any of my money, as it lets the company/funds that *do* manage my money (IE my 401k) buy stocks on the cheap thus increasing my profits. I do not support it for the company/funds that manage any of my money, as I want them *making* money for me, not *losing* it.

MarkW
December 20, 2018 9:28 am

David, the headline should probably read “Trillions under Mis-Management”.

John Endicott
Reply to  MarkW
December 20, 2018 10:38 am

Indeed, Mark, that would be a more accurate headline.

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