July 18, 2003 — You could say the companies Jackson Robinson buys are green and growing, and while the description is hackneyed, it’s not inaccurate.
Robinson, lead manager of the Winslow Green Growth Fund (WGGFX), looks for environmentally friendly business with increasing earnings and revenues, characteristics that are not mutually exclusive, he points out.
“A company that incorporates environmental responsibility into its planning and strategy can enhance its profitability,” he says. For example, manufacturers that reduce energy consumption can cut costs to help beef up their bottom lines.
Conversely, businesses and industries that pollute, or whose products can produce sickness, stand to lose money if they’re sued or forced to pay to clean up a site, Robinson argues.
As might be expected, the fund does not invest in the oil or nuclear power industries, and it generally avoids chemical makers. Tobacco and asbestos companies are shunned because of the illnesses these products can cause and their related potential legal liabilities, Robinson says. Weapons manufacturers are also excluded.
The fund welcomes companies whose products or services benefit the environment or are benign. Among acceptable investments are companies involved with renewable energy sources, such as sunlight, wind and water, as well as fuel cells, which convert hydrogen and oxygen into water to produce electricity and heat.
Once a company passes through the fund’s environmental screens, Robinson and his team look for financial strength.
Although he’s willing to bet on unprofitable companies if he thinks they will eventually turn the corner, Robinson wants to own those that can generate double-digit earnings and revenue growth. In addition, he favors strong cash flow. Most of the fund’s holdings are debt free, he adds.
Environmentally responsible companies tend to be small or mid-sized, and as a result, the managers focus on those with market caps of $100 million to $2 billion, Robinson says.
Only about 32 stocks make their way into the fund. Concentrating the portfolio facilitates research and enables winners to significantly boost returns, Robinson says. Owning a relative handful of stocks also gives the fund a shot at beating its benchmarks, the Russell 2000 growth index and the Russell 2500 index, Robinson says.
“If you’re looking to beat an index, you can’t really look like” one, Robinson says. “The fewer names we have, the easier it is to beat the index.”