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Dilemma: Buy or sell BP?

By Barbara Whelehan · Bankrate.com
Friday, June 4, 2010
Posted: 12 pm ET

We watch in horror as BP officials try one solution after another to stem the Deepwater Horizon oil gusher in the Gulf. At the same time, some rather callous investors are asking: Is this a good time to buy BP?

True, the stock closed yesterday at $39 and change, down significantly from its pre-crisis level of $62. Brett Arends of the Wall Street Journal ran an analysis of the "cold facts," figuring that the company's cleanup and liability costs might total about $22 billion -- not much when you consider the company's profit potential. Heck, its operating income last year alone was $22 billion.

Some socially responsible mutual funds own the company and are closely watching the events unfold to determine their stance on BP. For example, MMA Praxis International Fund held 1.9 percent of BP as of March 31, and its Intermediate Income Fund held 0.59 percent.

"BP's reputation as a firm committed to the highest level of corporate social responsibility, particularly among socially concerned investors, has taken an incredible blow with this crisis," Mark Regier, director of stewardship investing for MMA Praxis, said in a press release.

MMA Praxis Mutual Funds is a Christian-oriented socially responsible fund family that shuns military weaponry, alcohol, tobacco and gaming stocks. Its core values call for investment in companies that respect the dignity and value of all people and whose managements exhibit responsible practices concerning the environment, safety and public disclosure.

BP failed miserably in living up to these standards, in my opinion.

Regier told me he set up a conference call with senior-level management three weeks after the explosion of the Deepwater Horizon rig to get firsthand information about what steps the company was taking to end the spill. "We underscored our concern for the people and environment of the Gulf Coast and the need for BP to do all in their power to mitigate the devastating impact of this disaster."

I can't help but wonder: What would Jesus do in this situation? He subscribed more to socialism than to the system we practice here in America. I doubt he would invest any money in any company, even if he were back and destined to live out a long retirement

Yesterday I visited a specialist doctor who complained that America is the only country with a for-profit health system. The insurance industry is cutting back more and more on payments to doctors, with some companies paying substantially less than Medicare for reimbursement of services, while the insurance executives make multimillions. "How much profit do they need?" he asked rhetorically. "We should line up executives from Wall Street, the insurance industry and the oil industry against the wall and shoot them," he said. "We shouldn't give them blindfolds, and no last cigarettes, either."

MMA Praxis Mutual Funds has a lot more patience, as the oil spill did not prompt a quick sale of BP and will not prompt such action for several months. "It is not our approach to make decisions on restrictions based on single events," Regier told me. "But we tend to focus on policies, practices, priorities and accountability structures. There is much we can learn about a company during times of crisis."

As for whether BP can fix the leak, Regier says, "We have no ability to predict a solution to this crisis. But we hope and pray that someone does -- and soon."

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3 Comments
Richard
June 15, 2010 at 11:07 am

Jesus taught self respect and service. Socialism fosters neither. Capitalist societies do a better job providing for the poor than any other system. It does not matter how wealthy the rich get, American poor are still better off than in any other system or any known time in world history. Any "Christian" that acquires wealth will willingly share as long as the government does not forcibly steal. It is estimated that Bill Gates would be worth $25-35 billion more than he is, if he had not given so much away, and he continues to give his money away full time.

W
June 12, 2010 at 10:23 am

Sell . . . while you can . . .
BP headed for extinction . . .
there headed for the biggest public lynching in corporate history . . . though government is also at blame, they'll scapegoat BP

Seth
June 07, 2010 at 12:21 am

In what do you base your implication that Jesus favors socialism over capitalism?