Whether as a conscious effort to "do good" or part of year-end tax planning, investors think more about charitable causes and social responsibility during the holiday season. While some finalize gifts to causes they care about, others may ask how else they can incorporate into everyday life actions that could enhance the greater good.
At first glance, an investor might think that the $191 million Winslow Green Growth Fund (WGGFX) is just another no-load, small-cap growth fund with good long-term performance. But a closer look reveals a fund that looks for "small companies with big, green ideas, that also have enviable business and financial models, with a proven management team," says portfolio manager Jackson Robinson, who runs the fund with Matthew Patsky.
Standard & Poor's gives the fund a four-star rank for the five-years ending October 31, three stars for the three- and one-year periods, and three-stars overall.
How much money do the two of you manage overall?
Robinson: Our assets today are about $330 million; all of the assets are managed in an environmentally responsible manner. [And in the fund there is] about $200 million.
From its inception this fund's sole focus has been on the environmental aspects of the SRI [Socially Responsible Investing] world, and SRI is a broader way to look at investing that includes some non-environmental dynamics. The reason that our focus is primarily on the environmental aspects is because it's very measurable: you can measure environmental costs, environmental liabilities, and environmental revenue, whereas for other tenets of SRI investing it's more difficult to quantify either the costs or the benefits.
What's your investment process for the fund?
Patsky: We're primarily bottom-up stock pickers focused on looking for opportunities to identify industry leaders, new trends [in] industries. We're trying to identify companies that have strong management, promising technologies, or a promising product that we think can take a leadership position, and look for stocks that we think can double in the next 18- to 24-months. It's a concentrated portfolio strategy where we're looking to buy up to a 5% position in the company, leaving us with a portfolio, normally, just because of inflows or outflows in terms of names we're getting into or out of, of around 30 to 34 names.
When we look at the universe of potential stocks we're sort of simplistically carving it into three different categories: green companies that are offering environmental solutions; clean companies that are looking to minimize their environmental footprints; and dirty companies. We're certainly looking to include as many green companies as we can in our portfolio. To the extent that we can't fill the portfolio with all green, we're filling it out with clean, and our primary objective is to continue to deliver performance for the shareholders–so we won't force the percentage of green companies in the portfolio to 50% in order to be able to say we're at 50%; we're trying to make sure we are delivering performance, and doing it with a combination of green and clean.
Would you talk about your largest holdings?
Robinson: Happily. One of the holdings that we've been involved in for a long time is Fuel Tech (FTEK). This is a company whose business operations are in Illinois, [and it's] headquartered in Stamford, Connecticut. They are in the business of cleaning emissions from coal and heavy oil burning, primarily utilities or industrial boilers. One part of their business relates to removing NO [nitrogen oxide] and SO [sulfur oxide], so it's very much a regulatory-driven business and to some extent in that process you also significantly reduce mercury, which is a very big problem. The process also reduces particulate emissions.
