Ballmer Divests From Fossil Fuels

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Billionaires Ballmer and Buffett are taking different approaches when it comes to investing in oil and gas companies. Photo credit: The Editors.

Deep in a Wall Street Journal interview with former Microsoft CEO Steve Ballmer, who is one of the richest people in the world, comes this from Ballmer: “We did decide to not own oil and gas stocks anymore. That’s a decision we made in the last year or so as we’ve gotten more involved in climate. It’s not going to change the world of valuations for those stocks, but it feels more value consistent.”

When Ballmer says “value consistent” he appears to mean his own values about what is important and moral and good, not value in the economic sense of the price of the stock representing fairly a share of future earnings. If people like Ballmer are selling oil and gas stocks for non-economic reasons, it might at the margins create opportunities for buyers making investment decisions not on the basis of “feels” but rather on the basis of more narrowly rational judgments about price and earnings.

If you look at Warren Buffett’s Berkshire Hathaway’s latest 13-F filing, he reports about $13 billion worth of Occidental Petroleum and about $17 billion worth of Chevron. It’s possible Buffett/Berkshire may have sold some of that since then or bought more, and the value may have changed based on the market prices since the report date. It’s interesting to see Buffett taking a different approach from Ballmer. Perhaps Buffett feels an obligation to his shareholders to maximize their financial returns rather than to allow non-financial considerations to enter in, while Ballmer, who is running his own money outside the context of public-company investors, is less constrained.

Some people might says that Buffett, who is 94, has a shorter-term investment horizon than does Ballmer, who is 68. If fossil fuels are eventually eliminated and it hurts Chevron and Oxy P, Buffett may be off the scene by the time that happens, while Ballmer could be young enough to see it happen. Personally, I doubt it, but some people might say that. Yet even as a young investor Buffett was known for investing in what he called “cigar stubs,” businesses that the market thought didn’t have many puffs left and were accordingly priced as bargains. My sense of it is that Buffett’s age has less to do with it than does his investing approach.

As of this morning, Ballmer was no. 9 on the Bloomberg Billionaires Index, at $148 billion, while Buffett was no. 10, at $142 billion, though I have some doubts about the precision of those sorts of estimates.