“Should investors care about the political beliefs of executives? According to the managers of the Blue Fund, a mutual fund launched in the US in time for the mid-term elections, they should. The name (as in ‘blue states’) shows it is designed for Democrats. But its also shows Republicans how to invest in line with their politics,” John Authers reports for The Financial Times. “Blue Fund looks at the political donations a company has made from corporate political action committees, and from the pockets of its three most senior executives.”

“The research has yielded lists of ‘red’ and ‘blue’ companies, which gave 95 per cent of their donations to Republicans and Democrats respectively over the past 10 years. The bluest include Google, Apple Computer, Starbucks and Costco. The reddest include Exxon Mobil, Union Pacific, International Paper, Halliburton and Dell,” Authers reports.

“Over the five years to June this year, the blue index gained 139 per cent, compared with 34 per cent for the S&P 500, which in turn beat the red index. Even excluding recent stars Google and Apple, the blues are easily ahead,” Authers writes. “How seriously should we take this? It may be a fluke. Republicans could argue that after such a rally it looks time to sell blue stocks, and they should dispute the Blue Fund’s contention that Apple’s principles have helped it to be more innovative than Dell. Dell’s political conservatism did not stop it from revolutionising its industry in the 1990s.”

Authers reports, “Under President Bill Clinton, Dell grew at 93.8 per cent per year, according to Bloomberg data, while Apple fell at a 4.6 per cent annual clip. Under President George W. Bush, Dell has limped along at 3.8 per cent a year, while Apple grew at 47.5 per cent.”

Full article (subscription required) here.
Authers’ use of the word “innovative” in relation to Dell is unfortunate. Apple, which does it all, is clearly vastly more innovative than the Wal-Martesque PC box assembler Dell, regardless of politics. The political party of the U.S. President has about as much effect on the fortunes of Apple and Dell as Punxsutawney Phil has on the weather (although one might argue that Microsoft’s slap on the wrist vs. more severe penalties in the U.S. DOJ antitrust case was by some measure related to the administration in charge and could’ve changed the dynamics of the Mac vs. Windows market).

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