Credit: By Mary-Lynn Cesar for Kapitall.
On Tuesday, activists scored a preliminary victory when a University of California task force abandoned its prior recommendation that the state school system should keep its holdings in fossil-fuel companies. The Wall Street Journal reports that a number of task force members argued in favor of keeping the option of divestment-dropping the holdings from endowments-alive.
Following the meeting, the task force, which advises the UC investment committee, removed wording stating that selling fossil-fuel holdings wouldn't have a significant impact on climate change from its recommendation.
This development is the latest in an ongoing clash that pits activists' environmental concerns against universities' need to generate returns and pay for scholarships, facilities, and new hires. Similar debates are currently underway at Boston University , Brown , Harvard , and Yale among several other schools . And for good reason: The National Association of College and University Business Officers states approximately $22 billion in university funds-about 5% of total assets-are invested in fossil fuel companies.
Thirteen universities-including Hampshire College, Pitzer College, and Stanford University-have committed to divesting from fossil fuels so far. The institutions' decision to eliminate fossil fuel stocks from their investments inspired our following screen.
We began by assembling a group of fossil fuel stocks comprised of companies belonging to the following industries: independent oil & gas; industrial metals & minerals; major integrated oil & gas; nonmetallic mineral mining; oil & gas drilling & exploration; oil & gas equipment & services; oil & gas pipelines; and oil & gas refining & marketing.
After that, we decided to see which stocks investors were dropping, so we screened for stocks with a significant increase in institutional selling representing at least 10% of more of share float . Typically, we use 5% as our minimum, but that left us with far too many stocks. When institutional investors-hedge funds, mutual funds, pensions, etc.-sell such a high number of shares, it suggests that they no longer believe in the upside potential of the stock.
This left us with three stocks on our list. Do you think institutional investors are wise to dump these fossil fuel stocks? Use this list as a starting point for your own analysis, and let us know what you think in the comments.
Click on the interactive chart to view data over time.
1. Forest Oil Corporation ( FST , Earnings , Analysts , Financials ): Engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids primarily in North America. Market cap at $175.39M, most recent closing price at $1.47.
Net institutional sales in the current quarter at -14.7M shares, which represents about 14.14% of the company's float of 103.95M shares. The two top holders of the stock are Saba Capital Management, L.P. with 11.3 million shares and First Trust Advisors LP with 10.2 million shares.
2. HudBay Minerals, Inc. ( HBM , Earnings , Analysts , Financials ): Engages in the discovery, production, and marketing of copper concentrates containing copper, gold, and silver, and zinc metal and zinc oxide in North, Central, and South America. Market cap at $2.32B, most recent closing price at $10.07.
Net institutional sales in the current quarter at -29.2M shares, which represents about 12.74% of the company's float of 229.26M shares. The two top holders of the stock are Franklin Resources, Inc with 28.6 million shares and Letko, Brosseau & Associates Inc. with 19.8 million shares.
3. Quicksilver Resources Inc. ( KWK , Earnings , Analysts , Financials ): Engages in the exploration, development, and production of unconventional natural gas onshore in North America. Market cap at $199.80M, most recent closing price at $1.07.
Net institutional sales in the current quarter at -11.0M shares, which represents about 10.99% of the company's float of 100.07M shares. The two top holders of the stock are Mount Kellett Capital Management LP with 13.2 million shares and The Vanguard Group, Inc with 12.9 million shares.
(List compiled by Mary-Lynn Cesar. Institutional data sourced from Fidelity. Monthly return data sourced from Zacks Investment Research. All other data sourced from finviz.)
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