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CHESTERTOWN MD— On a Wednesday morning in December before the start of final exams, members of the Brown Advisory Student Investment Fund at Washington College suited up for a rare opportunity: a formal investor presentation from the CEO of a publicly-traded company.
Jeffrey Eckel, the president and CEO of Hannon Armstrong Sustainable Infrastructure (NYSE: HASI), went beyond the particulars of his own company’s mission and strategy in the 8 a.m. presentation, also offering an overview of green energy and the economics of sustainability.
Founded in 1981 and headquartered in Annapolis, Hannon Armstrong makes debt and equity investments in projects that increase energy efficiency, provide cleaner energy, or otherwise positively impact the environment. Over the past 34 years it has become the leading provider of financing for sustainable infrastructure projects for the U.S. federal government. “In a world increasingly defined by carbon, being on the right side of the climate change line will actually provide better returns,” said Eckel.
Hannon Armstrong launched its initial public offering in April of 2013 while simultaneously restructuring to a real estate investment trust (REIT). “We went public for two reasons,” Eckel explained. “One, we think, and I certainly believe, that climate change is the defining issue of my generation… . And second, it is an enormous opportunity to make money. Basically, we see the opportunity to refinance the U.S. energy business, which is the most capital-intensive business in the world.”
Eckel was invited to present to the Fund “in response to student interest in stocks that reflect sustainability, sustainable investments, and the College’s overall environmental focus,” said Susan Vowels, associate professor and chair of the Department of Business Management. “This is a tangible reflection of the College’s mission, vision and strategic plan.”
The Brown Advisory Student Investment Fund, originally named the Alex. Brown Student Investment Fund, provides Washington College undergrads with real-world experience investing and managing a sizeable fund in equities. Founded in 2005 with a $500,000 gift from W. James Price IV, a former partner and managing director of Baltimore-based Alex. Brown & Sons and a member emeritus of the College’s Board of Visitors and Governors, it is now valued at $665,000.
Members of the student-run Fund meet weekly to discuss current events that impact the capital markets and financial world. They are joined each Wednesday morning, in person on campus or through Skype, by professional fund manager Richard Bookbinder, who serves as their Senior Advisor.
The father of a Washington College alumnus, Bookbinder is the founder and manager of TerraVerde Capital Management, a New York-based hedge fund of funds for green investments. He says corporate governance can come into play when the students make their investment decisions: “In our last session, we had a position in a major U.S. bank, a household name, and we sold this position. A student asked, ‘Why are we rewarding this company for bad behavior?’ So we sold the stock.”
The student group has grown increasingly interested in sustainability and climate change and wanted to hear a presentation from HASI because they felt the company was “on the cutting edge when it comes to reducing emissions and improving energy efficiency,” according to Bookbinder.
As part of the Fund investment approach, the students select industry investment “sectors” such as industrials, health-care, or energy, and then specialize in researching specific industries and companies. They then make buy-sell recommendations to Bookbinder, who follows up with the College’s finance and investment office to execute the stock trades. The Fund’s faculty advisor is Hui-Ju Tsai, an assistant professor of business management. She and Bookbinder are proud of the program’s performance; it earned a 5.6% percent return for the first nine months of 2014 (when the overall return on the New York Stock Exchange was 8.3 percent).
For the December 3 presentation by Eckel, students in all sectors of the investment fund were invited. “It was definitely a learning experience. It was nice getting exposed to other sectors,” said senior Chris Lucas, who normally works within the industrial sector. Zachary Revak, a junior business management major, agreed. “I thought Mr. Eckel was a great speaker,” he commented. “And I think we need to really consider it, because energy efficiency is going to be a major player in the future.” Eckel was asked how HASI stock would perform in the wake of declining oil prices. He responded that, while oil prices are affecting the transportation industry, changes in crude oil do not impact the necessity for sustainable household and business energy use.
The Fund will make a decision about investing in Hannon Armstrong when its members reconvene early in the spring semester.
Before leaving campus, Eckel commented on the overheated Bunting Hall conference room where the meeting was held and the windows left open to provide relief. Then he issued something of a challenge: “In exchange for my doing this presentation, Washington College should commit to an energy audit.”
—Catalina Righter ’17, with additional reporting from Emily J. Summers