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FORBES.COMHOW^TOPLAYIT^BYNATHANVARDI:^ PATRICK^ WELSHFOR^ FORBESJUNE 30, 20 19CONTRARIANINVESTINGSince November, Robert
Gibbins has crisscrossed the globe attending sci-
entifi c conferences, traveling from his home in
Geneva, Switzerland, to Arizona, Spain and Aus-
tria. The events had a common theme—climate
change—and were well attended by academics,
bureaucrats and politicians. One group was con-
spicuously absent. “I didn’t see any other inves-
tors there,” he says.
That boggles his mind. “Climate change is
something we have to include in every single
analysis, every investment,” he says. Most people
think—or hope—that global warming is some-
thing their children or grandchildren will have
to reckon with. Gibbins disagrees. The 49-year-
old founder of Autonomy Capital ($5.5 billion in
assets) thinks that climate change is happening
suddenly and soon.
He structures every bet his hedge fund makes
around his belief that the world is skidding to-
ward a future that’s overheated and underwa-
ter—and that carbon will be treated as a costly
waste product that needs to be captured and
stored. Gibbins has already made good money
betting on European carbon-futures contracts
and expects richer plays to come.
Gibbins has an impressive track record mak-
ing big calls. His fund, which places large bets on
sweeping economic and political trends, is an in-
dustry standout, returning an annualized 12.85%
net of fees since its November 2003 inception,
compared to 8.9% for the S&P 500 index.
The ski-happy, outdoors-loving son of a Van-
couver real estate agent, Gibbins made stops at
the University of Pennsylvania and the trading
desks of JPMorgan and Lehman Brothers before
starting Autonomy. For many countries, he be-
lieves, climate change will be a major stress on
economic stability. If a country is a basket case
now, it’s only going to get worse as the seas keep
rising and other fast-paced changes hit. “It’s not
enough anymore to create a cheap T-shirt, caror semiconductor,” he says. To that end, Gibbins
recently shorted the debt and currencies of Tur-
key and South Africa. He views both countries’
governments—led by Recep Tayyip Erdogan in
Turkey and the ANC party in South Africa—as
totally inept. “You can choose to be ruled by the
ANC or Erdogan, or you can be a modern indus-
trial economy,” he says. “You can’t have both.”
By contrast, he’s going long on Argentina. On
recent trips there, Gibbins found people were
exhausted after a decade of economic hardship
and failed policies, convincing him the coun-
try won’t return populist Cristina Fernández de
Kirchner to power (she last held the presidency
in December 2015). The country’s debt is priced
for disaster. “My view is, in Argentina, the society
has had enough. It doesn’t want policies that are
designed for the next three days,” Gibbins says.
As he sees it, all sophisticated investors these
days have access to the best government and
economic data. He travels 150 days a year in the
pursuit of an edge and expects the 24 investment
pros and economists working for him to do the
same. He meets with local bureaucrats, journal-
ists and business executives to gauge how deci-
sions are made and how well local institutions
function—and whether they can handle chal-
lenges like climate change.
What about individual stocks? One obvi-
ous thought is to avoid property insurers like
AllState and Travelers, which seem likely to
get clobbered by rising costs, paying out more
as weather-related damage piles up. Gibbins
doesn’t buy it. He thinks insurers could fare
just fi ne because much of their business is writ-
ing coverage for short periods, giving them the
chance to reprice their products. Gibbins says
REITs have a lot more risk.
You want even more against-the-grain think-
ing? Despite President Trump’s decision to pull
out of the Paris climate accord, Gibbins antici-
pates the U.S. will eventually take the lead with
Europe on a global deal to limit carbon emissions
and penalize countries that don’t comply. So Gib-
bins thinks big oil stocks, like Exxon, or the cur-
rencies of oil-addicted nations, like Nigeria, are
vulnerable.S
HOW TO PLAY IT
According to
Todd Ahlsten
Climate-conscious
investing is the
core competency
of San Francisco’s
Parnassus Invest-
ments. Todd Ahl-
sten, manager of
its $17 billion Par-
nassus Core Eq-
uity Fund, is a top
holder of Linde,
a U.K. maker of
industrial gases
used to decarbon-
ize factories and
refi neries. He also
likes Jersey City’s
Verisk Analytics,
which provides
data analysis
to insurance
companies that
underwrite climate
events, and Xylem,
which makes
water pumps for
rising water levels.
Stocks to avoid?
California utility
Sempra Energy,
which his fund sold
this year because
Ahlsten could no
longer price the
risk of its high-line
wires to rising
winds. “We are
looking at physical
risk and position-
ing the portfolio to
be long benefi cial
products and com-
panies that are
helping with the
transitional risk [of
climate change],”
says Ahlsten.FFINAL THOUGHT
“THE SADDEST ASPECT OF LIFE
RIGHT NOW IS THAT SCIENCE
GATHERS KNOWLEDGE FASTER
THAN SOCIETY GATHERS WISDOM.”
—Isaac Asimov