Why Dirty Stocks May Not Be Sin Stocks
The attributes that help alcohol, defense, gambling and tobacco outperform the market don’t necessarily apply to the fossil fuels sector.
A sin against nature.
Photographer: tatisol/iStockphoto/Getty ImagesHas the push for ESG-focused funds to divest from fossil fuel companies created an opportunity for less bleeding-hearted investors to make money?
Some seem to think so. There’s “an enormous opportunity for norm-agnostic investors willing to lean against the ESG wave,” the Financial Times wrote last month, pointing to the vast valuation gap between Tesla Inc. and Exxon Mobil Corp. The latter, whose market cap was briefly overtaken by renewables company NextEra Energy Inc. in October, has since rallied with the price of crude and is now worth nearly 80% more. The Global X Renewable Energy Producers ETF, after comfortably outperforming the SPDR Oil & Gas Production & Exploration ETF in each of the past four years, has fallen 15% so far this year. Its oily cousin is up 48%.