Pax World Funds divested its shares of Starbucks Coffee Co. for having too much "liquidity" by mixing with Jim Beam.
Pax, Portsmouth, N.H., divested all of its 375,000 shares of Starbucks stock, valued at an estimated $23.4 million, because of a deal Starbucks made last year deal with Jim Beam Brands Co. Deerfield, Ill., to develop and sell a coffee-based alcoholic beverage.
In Feb. 17 letter to Starbucks' CEO Orin Smith, "Pax World Funds and other parties urged the company to reconsider the decision," according to a Pax statement issued March 23. Pax had not yet received a reply from Starbucks, the statement said.
The Starbucks stock was held in the Pax World Balanced Fund, representing 1.6% of the $1.5 billion portfolio, Anita Green, Pax vice president of social research, said in an interview. Pension and 401(k) plans hold 9.5% of the portfolio, she said. Pax had held the stock for eight years, she said, adding it was a good performer. She said Pax won't consider buying Starbucks stock again until its ends the Jim Beam relationship and avoids any other alcohol-related deals. She declined to say what the fund bought to replace the Starbucks stock.
"While we continue to admire and respect many aspects of Starbucks' business and corporate citizenship activities, the company essentially forced our hand in this matter," Ms. Green said in the statement. "We have divested ourselves of these shares reluctantly."
In an e-mail to Pensions & Investments, Audrey Lincoff, director-media relations at Seattle-based Starbucks, said: "Starbucks is disappointed in their decision; however we acknowledge that Pax World Funds has a strict policy that it will not invest in companies that derive revenue from the manufacture of liquor."