Media Blog

NYT, CBS Stock in Both Blue and Red Mutual Funds?

The New York Times ran a story yesterday about mutual funds that cater specifically to liberals or conservatives, and several conservative blogs have pointed out that the NYT failed to disclose the presence of New York Times Co. stock in the portfolio of The Blue Fund, which only invests in companies that make at least 51 percent of their political donations to Democrats.

Neither the New York Times nor these conservative bloggers reported a somewhat more interesting fact: The right-leaning fund featured in the story, the Free Enterprise Action Fund, also has NYT Co. stock in its portfolio (CBS, too). Why? The answer probably has something to do with an important difference between the two funds, which the NYT describes:

The Blue site says the funds will invest only in companies that both “act blue” and “give blue.” The Free Enterprise Action fund site says the managers want to wage shareholder proxy campaigns to “promote the American system of free enterprise.” The Blue funds operate much the way traditional socially screened funds do, eliminating companies they regard as having poor environmental records, for example.
But what really sets the Blue funds apart is their exclusion of companies that make less than 51 percent of their political donations to Democrats. Although the funds do not have any official connections to the Democratic Party, the funds’ managers, Daniel de Faro Adamson and Joseph J. Andrew (a former Democratic national chairman) plan to meet with finance chiefs of Democratic political campaigns and union pension funds to ask them to become Blue fund investors. […]
The Free Enterprise Action fund does not exclude stocks based on social or political criteria. It now includes the 450 largest stocks in the S.& P. 500. The managers view the fund as a platform from which to start shareholder proxy battles — so all the better if bad apples are included. “The corporation has become an extension of the cultural battle in our society,” said Steven Milloy, co-manager of the fund. “Thirty or 40 years ago, before all of this social investing started, companies were just in business to make money. Now corporations are being hijacked by various activist groups.”

In short, The Blue Fund’s investment in the NYT Co. and CBS is an endorsement of those companies’ current politics. The Free Enterprise Action Fund’s investment is an attempt to push those companies to the right.