Next Up for the Divestment Crowd: Junk Food Stocks?

You know how we rail up one side and down the other about health-minded philanthropies taking money from fast food companies? You know how we like to talk about hypocrisy, whether it’s the Susan Komen Foundation taking money from fracking companies or Walmart donating money to food banks or PepsiCo donating to end childhood obesity. Do they really care, or is it just PR?

Well, we may be left to wonder at the aforementioned, but we can put our curiosity to rest regarding one of the biggest. The Gates Foundation Asset Trust, which manages the investments for the $42.3 billion Bill & Melinda Gates Foundation, liquidated its positions of McDonald’s Corp., Coca-Cola Co. and Exxon Mobil Corp. in the fourth quarter.

Nearly 11 million shares of Mickey D’s were valued at $1 billion alone, according to a regulatory filing, and the trust sold them at the end of September. It sold 21.4 million shares valued at $914.2 million in Coca-Cola and 8.1 million shares in Exxon Mobil that were worth $765.9 million.

"Egregious" is the word behind the action. Right in the Gates Foundation’s charter, it says is doesn’t invest in companies that engage in corporate activity the foundation finds to be “egregious,” and that includes tobacco stocks and investments in Sudan, according to its website. Nice. So, for the time being, Coke and McDonald’s (and Exxon, let’s not forget) are sitting on the same bad-kids bench as tobacco companies. It's about time.

But while it's good to see the Gates Foundation moving here, you have to wonder: What were they doing with so much stock in those companies to begin with? 

The answer, maybe, is that the push to get foundations to align their stock holdings with their program goals is still relatively new. And while fossil fuel stocks have been in the crosshairs of divestment advocates for a while now, junk food stocks are a more recent target. We're betting they became a much bigger one going forward, which puts Gates ahead of the curve with its recent move. 

To replace the big sell-off, the trust bought 4.5 million shares of United Parcel Service Inc. valued at $503.1 million in the quarter as well as 3.4 million shares of Walgreens Boots Alliance Inc. valued at $264.8 million. So, shipping and drug stores. That’s a step up, for certain.