Billionaire Candidate Steyer Admits to Carbon ‘Dregs’ From His Hedge Fund Days

Bill Allison and Tom Maloney

(Bloomberg) -- Billionaire Tom Steyer acknowledged he still has some holdings in hydrocarbons, saying he made the investments years earlier but has been unable to unwind them.

Appearing at an MSNBC Climate Forum on Friday, Steyer -- who has made the environment a centerpiece of his 2020 presidential campaign -- was asked whether he had completely liquidated his holdings in oil, gas and coal, some of which were acquired while he ran Farallon Capital Management, an investment company.

“There’s probably some dregs left,” he said, adding that any income he receives from such investments is donated to charity.

The former hedge fund manager listed his assets in a filing to the Federal Election Commission on Monday. The disclosure shows he still has holdings in the kinds of companies whose work he rails against on the campaign trail.

In some cases, his portfolio and his politics align in green-friendly companies like Ample Inc., which aims to address the energy delivery challenge for electric vehicles, and Station A LLC, an automated clean-energy development company.

Australia Development

But the filing also lists two separate private equity funds launched by banker Mark Carnegie, who has bet heavily on fossil fuel development in Australia. Steyer’s stakes are worth between $1.3 million and $5.5 million, according to the disclosure, which only requires the candidates to use broad ranges of numbers.

At least one of the Carnegie funds made a substantial investment in Strike Energy Ltd., which develops coal-seam gas in Australia. Farallon, which Steyer founded in 1986, had also invested in Australian coal development with Carnegie in 2009. He invested his own money two years later.

Steyer, who is worth $3.1 billion according to the Bloomberg Billionaires Index, also owns investments worth between $6 million and $31 million with Tinicum Capital Partners LP, a New York private equity firm that invests in oil and gas and other industries it considers out of favor. One of the funds Steyer owns through Tinicum acquired Flat Rock Development LLC, an oil and gas exploration and production company with fracking operations in the Appalachian Basin.

Steyer’s disclosure also lists a stake worth less than $15,000 in Direct Petroleum Exploration Inc., a relatively unknown, closely held oil and gas company.

In his appearance at the MSNBC forum, Steyer said he set up rules to divest the holdings years ago. “The process takes longer than I’d like,” he said.

Alberto Lammers, a campaign spokesman, said standard contractual obligations in some private equity funds prevent Steyer “from simply leaving.”

Steyer also disclosed owning between $5.3 million and $25.5 million in shares in Wells Fargo & Co. In announcing his candidacy, Steyer criticized banks for “screwing people on their mortgages.” Wells Fargo settled a lawsuit in March that claimed it improperly filed mortgage-payment change notices on borrowers in bankruptcy proceedings.

Steyer also holds at least $5 million worth of shares in LPL Financial Holdings, Inc., which has spent $4.8 million on federal lobbying, taking particular aim at the fiduciary rule, a requirement that all financial advisers act in the best interest of their clients. Senator Elizabeth Warren, a Steyer rival, said the rule would “end the kinds of kickbacks and incentives that put families’ retirements at risk” less than a year before a federal court struck it down in 2018.

Lammers said that Steyer’s holdings in Wells Fargo are in a brokerage account managed by a third party, while the LPL Financial stock is a distribution from an investment fund that the candidate no longer participates in.

Steyer also lists an investment of between $250,001 and $500,000 in a fund run by Folium Capital LP, started by three former Harvard Management Co. executives who spearheaded the university endowment’s timber purchases in Brazil, Uruguay and Argentina. The firm says it invests in renewable forestry and agriculture.

When he announced his presidential campaign in July, Steyer said, “Almost every single major intractable problem, at the back of it, you see a big money interest for whom stopping progress, stopping justice is really important to their bottom line.”

Ad Buys

Steyer, who has said he will spend $100 million on his campaign for the White House, has spent $14.4 million on advertising, more than any of his rivals for the Democratic nomination. The big ad buys are paying off: He raised his poll numbers and secured enough donors to qualify for the Oct. 15 Democratic debate in Ohio.

Steyer has also put $20 million into his separate campaign to impeach President Donald Trump, and spent more than $240 million to influence federal elections since 2013, most of it through his NextGen Climate Action Super-PAC.

The investments Steyer made while running Farallon faced some scrutiny when he became a big political donor. His spokesmen at the time suggested those investments were made in the interest of maximizing returns for his clients.

Steyer took a pledge, as did his rivals, not to accept donations made by executives and political action committees of fossil fuel companies. He says he would declare a climate emergency in his first day in office and shift policy to limit carbon emissions by, among other things, curtailing oil production and fracking on federal lands.

“You look at climate change, that is people who are saying we’d rather make money than save the world,” Steyer said when announcing his campaign.

In a July interview with CBS News after he got into the race, Steyer said his investment experience running Farallon Capital had opened his eyes on the environment. “I came to understand there was something deeply wrong, starting really with fossil fuels,” he said, adding that he divested from the industry and became a climate activist more than 10 years ago. He stepped back from Farallon, where he notched average returns of about 17% over two decades, to devote himself to philanthropy and politics in 2012.

Connections to the fossil fuel industry have caused problems for another candidate at a similar event. Front-runner Joe Biden faced pointed questions at a climate town hall held by CNN on Sept. 4 about a fundraiser for him co-hosted by Andrew Goldman, who co-founded Western LNG, a Houston-based company that develops liquefied natural gas export facilities.

To contact the reporters on this story: Bill Allison in Washington at ballison14@bloomberg.net;Tom Maloney in New York at tmaloney38@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Wendy Benjaminson, John Harney

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