Houston millionaires love oil and gas but shun clean energy investments

HOUSTON – Wealthy investors in Houston park nearly a quarter of their cash in the energy industry, and most bet heavily on fossil fuels, a new survey shows.

Ninety percent of the city’s millionaires owned a stake in oil and gas companies or funds, according to a Morgan Stanley survey released Wednesday.

Few of the same investors showed any affection for clean energy sources like wind and solar power. About 15 percent of the surveyed group owned wind and solar energy stocks and funds, and almost three-quarters of the city’s investors say they have no plans to back clean energy.

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Millionaires living in the global energy capital defied national attitudes about investing. While most U.S. investors believe technology is the best place to plant a seed, energy handily beat every other industry among Houston’s wealthy, according to Morgan Stanley, which surveyed 300 local investors and 1,000 across the U.S.

It’s no surprise that energy dominates in the energy capital of the world, said Matt Kabot, managing director at Morgan Stanley in Houst0n, in an interview Wednesday.

But since the late 1980s, when tanking oil prices crushed the local economy — and everything from community banks to the real estate industry suffered for years — Houston has branched out in other industries, especially in health care.

That may explain why 61 percent of Houston investors believe biotechnology and pharmaceuticals are top investment sectors, Kabot said.

Buying familiar stocks

But oil and gas still dominates.

It’s much the same in many other parts of the country where industries are highly concentrated. People who live in Atlanta own Coke and Home Depot. In the Silicon Valley, technology giants are the local flavor. In Houston, it’s hard to find a person who isn’t at least related to someone who works in the oil and gas business, said Andrew Gardener, president of Tanglewood Legacy Advisors in Houston.

“People are buying things that at least they think they know,” Gardener said. “If 90 percent of your net worth is tied to the price of oil and gas, then it definitely makes sense to diversify.”

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But Houston’s wealthy investors may be more connected to wind, solar and geothermal power sources than they realize: Integrated oil companies like Shell and Chevron are among the biggest investors in clean energy.

“They’re hedging their bets,” Gardener said.

Bullish on Houston

Morgan Stanley also found that Houston investors are more bullish about the local and state economy than their counterparts across the country. But they were more concerned about the national economy and overseas prospects than the average U.S. investor.

Other statistics:

  • Seventy-seven percent of Houston’s high-net-worth investors regarded energy as a top investment, compared to 66 percent nationally. Twenty percent of those investors own a stake in a Texas-based energy company.
  • After energy, 65 percent of that group believe technology is one of the best places to pump money.
  • About 17 percent of Houston investors own a stake in wind energy. Slightly fewer invest in solar (16 percent) or coal (15 percent). About 9 percent have geothermal investments and just 4 percent invest in electric vehicles.

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