Years before Wall Street bought into the idea, Robert Wilder set out to prove that investing in alternative and clean energy solutions was not just for tree huggers. Although it has experienced the price volatility characteristic of any emerging sector, as of 17 October the WilderHill Clean Energy Stock Index (ticker symbol ECO) had risen 99.2 percent since its launch on the American Stock Exchange on 16 August 2004. It was up, year to date, by 33.4 percent. Investors have poured more than US $1 billion into PowerShares WilderHill Clean Energy Portfolio (symbol PBW), the exchange-traded fund that holds the same stocks in the same weights as the index. (Exchange-traded funds can be traded and priced any time of the day, unlike traditional mutual funds.) The fund was named the Best Exchange Traded Fund for 2007 by the popular investment Web site The Motley Fool.
What makes Wilder’s approach to stock picking unique is a disciplined focus on a company’s technology. Financials are a secondary consideration. Rather than targeting undervalued companies as most other stock pickers do, Wilder chooses firms for ECO because they are applying technologies that are deemed most likely to gain value from society’s transition to cleaner energy and efficiency.
You could say that Wilder has been looking for a way to link the ”real” world of finance and economics with research and technology since youth. He was fascinated with electronics, lasers, and ham radios as a kid growing up in Baltimore in the 1960s and ’70s. This early delight in technology lead him to study the links between public policy and scientific inquiry, or as he calls it, ”the bigger picture stuff.” He pursued a degree in political science at the University of California, Santa Barbara, where he confesses, ”I was consciously and with great intent trying to be an okay student while motorcycling, playing soccer and lacrosse, and surfing. I was a nice Jewish boy from Baltimore living the California beach boy fantasy.”
After earning a law degree from the University of San Diego in 1985, Wilder got funding to pursue graduate work through California Sea Grant and the University of California, San Diego’s Scripps Institution of Oceanography at what was then the Institute of Marine Resources. Although he eventually earned a Ph.D. in political science in 1991, he spent part of his postgraduate years studying new solutions to ocean pollution at Woods Hole Oceanographic Institution, in Massachusetts, and monitoring work being done at Scripps on the conservation of marine biodiversity
”All my published papers were in environmental science and technology and marine policy,” says Wilder. ”I wasn’t interested in researching or writing about voting behavior.”
In 1993, newly married to Diana Francis, a former forest ranger from California, Wilder accepted a position at the University of Massachusetts, Dartmouth, where he taught environmental policy and was continually seeking a way to keep ”one foot in academia and one foot in the real world doing applied solutions.” In 1996, he returned to the University of California, Santa Barbara, where he asked the head of the marine sciences department for some office space. ”He gave it to me,” says Wilder, ”and I set about just trying to figure out a way to be more ’applied.’ ”
The opportunity came in 1999 when Wilder connected with Joshua Landess, a bright economist schooled at the University of Chicago who had created a Web site that used algorithms he had developed to produce near-live pricing of groups of alternative energy stocks. Contributing his expertise in pollution prevention technologies, Wilder collaborated with Landess on a stock index composed of companies whose ”core technologies were desirably zero/low carbon.”
It was an exciting time for Wilder. ”I felt I was a naturalist in the arena of science and finance,” he recalls. ”The beauty was [that] there was a lot of low hanging fruit. Typically the people running environmental investment funds at that time did not look at science and technology. They looked at quarterly earnings and ended up with the big waste-cleanup companies, with big earnings in very mature, noninnovative industries. And all the energy funds were oil, coal, or natural gas. Few of them were in solar or wind power or pollution prevention.” Wilder and Landess, on the other hand, were looking for emerging companies in cutting-edge clean technologies that were plowing their earnings, if they had any, back into research and development.