Tuesday, October 18, 2022

Get rich quick: turn a brown company green

The WSJ has a get-rich-quick scheme on their editorial page.  Since green companies carry a 300-basis-point equity-valuation premium over brown ones, buy a brown one, turn it green, and then sell it. 

Here is an example: 
According to Cushman & Wakefield, midmarket offices with LEED certifications carry a 77.5% premium over noncertified offices. Upgrading buildings from “brown” to “green” would generate significant financial value.

If you could do this in a year, put 20% down and borrow the rest from a bank at 5%, you would generate a 167.5% return.

WARNING:  Correlation is not causality.  It could be that valuable companies are the ones that go green because they are the only ones that can afford it.  If so, do not try this, unless of course the government pays you to do it.

Teacher's note:  Quick is an adjective, not an adverb.  See Hold on Loosely by 38 Special.


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