Socially Responsible?

I don't generally believe that "socially responsible" investing is a particularly good way to go about getting good returns on your money, though it definitely works for some of the big managers in this area.

And there are several "sin" companies that I find interesting -- mostly in the gambling and alcohol sectors. I don't own any of them at this point, but it's certainly possible that I will in the future.

I have been interested, however, to find myself staying away from three companies recently that otherwise might be a bit interesting to me because I'm not comfortable for some reason with being invested in their businesses.

I have never held Altria, but this summer and fall it started to look appealing as an undervalued company with continuing dramatic international growth. Still, I never took it seriously because I can't see myself buying shares in and getting involved in a tobacco company due to a personal distaste for the cigarette business.

And recently, I started looking at Reed Elsevier (RUK). I'm an academic, and Elsevier is the dominant "brand" in academic publishing and most profitable scholarly publisher in the world, as well as owner of the strongest brand in legal research in LexisNexis and one of the bigger textbook companies in Harcourt. Still, I've been holding back even though I think the company will show a big return over the long haul -- I think Elsevier is a bad influence on scholarly communication and I'm a little wary of investing.

Along the same lines though to a much lesser degree, I've been holding off on investing in Microsoft (MSFT) . I don't think they're evil as some do, but I hate being a customer of theirs and I don't much like most of their products, ubiquitous though they are. I may still get over this personal dislike, but it is holding me back at the moment.

I don't avoid all companies that might be bad for the environment, or in an unpleasant business, or otherwise wouldn't pass "socially responsible" screens. I have owned plenty of oil companies in the past, for example, like Statoil (STO) and Petrobras (PBRA) and Suncor (SU), all of which are pretty rough on the environment to some degree ... and I currently own copper and gold miner Northern Orion (NTO), and there aren't many businesses that are as rough on the earth as mining. Even beyond that, my single most successful investing focus over the years has been on the oil tanker business, I made great returns on Torm (TRMD), Frontline (FRO), OMI (OMM), and Overseas Shipholding (OSG) in 2003 and 2004 (and, ironically, cashed in those returns last winter to buy a new car). I see Americans avoiding companies like those to be somewhat like a meat-eater decrying the death of animals from hunting or the livestock business -- kind of silly and a little bit hypocritical.

But my personal feelings about a company definitely are a part of my investing process. I don't screen my mutual funds in various retirement accounts to make sure that they don't invest in any company I dislike or disapprove of, but for the companies that I spend a lot of time researching and am interested in owning, a personal interest in the company and lack of distaste for them is important to me on some level.

This is really just to say, and perhaps it's obvious, that investing is personal for me. I invest in individual companies because I like being an owner of interesting companies with good stories and great potential, and it becomes much less fun and interesting if I don't like the companies. There are thousands of potential investment vehicles out there, I prefer to focus on the ones that I find interesting and appealing enough to make it worth my time and attention as well as my money.

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