Right-wing fund managers Steve Milloy and Tom Borelli are grabbing lots of attention for accusing companies of devoting resources to pet causes instead of maximizing profits. Last month they showed up at Goldman Sachs' annual meeting in New York to attack CEO Hank Paulson for, among other things, chairing the Nature Conservancy and authorizing Goldman's donation of land it owned in Chile to the Wildlife Conservation Society. But a look at the returns of the pair's grandly named Free Enterprise Action Fund suggests that their own bottom line could use some help. The $5.6 million fund gained just 2.32 percent from March 1, 2005, its first day in business, through the end of the year, net of expenses. That's well below the S&P 500's 4.72 percent gain during the same period -- and it doesn't hold a candle to the 18 percent appreciation of Goldman shares.
Sure enough, the partners hold their own venture to different standards. Their returns, they say, don't matter as much as their stated cause: counteracting the influence of so-called socially responsible investment firms, like Domini Social Investments and Calvert, on corporate behavior.
"We're not trying to be a high-performing mutual fund," Milloy, 47, tells Institutional Investor. "We are imitating the left. Left-wing social-political activists don't like capitalism. They hide behind human rights. We want to help oppose that."
The pair have plenty of experience standing up for corporate America's right to ignore do-gooders. In his spare time Milloy publishes JunkScience.com, a Web site devoted to debunking global warming as a "myth." He formerly ran the Free Enterprise Action Institute, which was funded in part by ExxonMobil. Borelli previously worked as a lobbyist for food and tobacco giant Altria Group. . . .
As Unknown Ideal points out, "I'm sure these self-professed champions of capitalism will attract a lot of investors with a fund philosophy like 'We're not trying to perform well.'"
It cracks me up that so much attention is being paid to Bush Pioneer and new Treasury secretary nominee Paulson as a global warming believer in direct contrast to the administration he loves so much. But the opinion of the Secretary of the Treasury on global warming is irrelevant — he wasn't nominated for Interior or Energy.
The grand irony, of course, is that so-called capitalists Milloy and Borelli are treating the stewardship of their investors' money as some sort of perverse attempt at advocacy. Talk about a dereliction of fiduciary duty. Now Republican madness has come full circle: capitalists who don't practice capitalism.