1. Boomer Market Advisor: How are your inflow rates? Are people taking to socially responsible investing and green strategies?
Paul Sutherland: I think that some people are, but I think a lot of people are more values-neutral in their investing. I think that they separate the two significantly.
2. BMA: And Utopia Funds specializes in SRI?
PS: We call it sustainable investing. Any investor needs to look at the people and the culture [of a company]. We spend a lot of time trying to look at a company's culture and product. You want great caring people running the companies.
3. BMA: How does your due diligence process differ from the norm?
PS: The first thing is that, automatically, we don't own certain industries; for example, the tobacco industry. Having said that, nobody's perfect. So you want to have sort of a balance there. I drive a car to work; I print too much paper when I'm doing research; I fly too much and have a big footprint. But I try to minimize what I can; we all try to do what we can. Every company we own has a similar spirit of trying to minimize their footprint as much as they can.
4. BMA: What's your take on the shareholder democracy movement?
PS: Aristotle, I think, said the problem with democracy is it reflects the will of the people. Often you have people who are in a democratic group that are all in it for the short-term. I'm a big believer that transparency is incredibly important but you have to look at who your shareholder base is. They could be very values-neutral and only interested in very short-term profits. But I think that anything that adds to transparency is good.
5. BMA: What do you think of SRI screening processes? Are they effective?
PS: We don't believe in using screens. We think that you need to use judgment that's processed through your brain and your heart.
6. BMA: So the SRI screening process is one that can't be automated?
PS: It's not an automated process because you want principle-based behavior, not just legal. My dad told me, "Paul, I want the car in the garage by midnight." So I drove home, put the car in the garage, jumped in my friend's car and partied the rest of the night. I did what my Dad asked. I bent the letter of the law, but I knew what he meant. Businesses do the same thing.
7. BMA: How are you doing from a performance standpoint?
PS: Pretty good. It's been a tough year for us but overall it's very good. I'm excited about what we're able to buy at today's prices. We've added a lot of opportunity to the portfolios and I'm feeling very comfortable about our future.
8. BMA: What sectors do you like? Where are you finding good deals?
PS: There are a lot of them. Media
9. BMA: You're not buying Tribune, are you?
PS: Not Tribune. But we own The New York Times, independent news and media in Ireland, Indonesia, Africa and throughout Europe. We like Gannett. We think the content of those companies is very valuable. Another area we like is clean energy, especially wind energy and the wind farm businesses. Then there are the good old consumer companies that just seem way too cheap.
10. BMA: There are early rumblings about the possibility of an alternative energy bubble. Are you at all concerned?
PS: I'm really concerned. At one time we owned three of the four main windmill makers, but we don't own any of them now because they're overvalued. We own some of the companies that are indirectly involved in solar energy, because the direct solar energy companies are growing like crazy. We own a company that makes insulation to help conserve energy. There are huge opportunities, but most people want to have a one-story stock so they buy a solar company that is extremely expensive. Instead, they should be buying companies that have good principles and are selling at great prices.