Value Investor

April 24, 2013
Value Investor

Katherine Collins, MTS '11, was a rising star at Fidelity Management & Research Company, one of the country's leading investment firms. During her 18-year career at the company, she managed diversified mutual funds with assets of over $4 billion and was promoted to be head of equity research.

Despite this success, Collins felt that she had somehow veered off track. The work she loved most—connecting ideas with people and resources—had dwindled in favor of an approach to investing that was more "mechanical and engineered."

"What grew throughout my time at Fidelity was not that core of investing that was connected in nature, but all of the activity around it," she says. "The field became focused on growth and scalability and efficiency rather than the essential questions of connection and value. It was finance rather than investing."

Collins's passion for value and connection brought her to Harvard Divinity School. Today, thanks in part to the philosophical and ethical foundation she developed as a student in the master of theological studies program, she heads her own research and consulting firm, Honeybee Capital, which focuses on "integrated investing."

"Whether you're talking about investing in stocks or investing your time," she says, "the fundamental question for any investor is, 'What do you value and how can your actions best reflect those values?' HDS helped me make sense of that."

Collins grew up in Reading, Pennsylvania, a community she calls "wonderfully stable and supportive." Admission to Wellesley College, where Collins studied economics and Japanese, brought her to the Boston area. After graduation she took a job at Fidelity, where she worked with smart, engaged people, and with both qualitative and quantitative data. She enjoyed the way that her work made her think independently and then apply her ideas to an area where she could measure the impact.

"It was a very liberal-arts approach to investing," she says. "I looked at all kinds of different companies in all kinds of different industries—everything from cement to medical equipment, big conglomerates, media companies, you name it."

Over time, however, Collins was troubled by the expansion of a more convoluted approach to investing that she saw throughout the financial sector. She decided that she wanted her career to be about cultivating the bonds between resources, people, communities, and even the natural environment.

She came to Harvard Divinity School to confront the philosophical questions related to her profession and to develop a sound ethical foundation. She found her HDS classmates more than willing to help.

"I landed on campus in the middle of the financial crisis," she explains. "It wasn't so popular to be a 'financial person' then. People challenged me both inside and outside of the classroom with fundamental questions about my chosen profession. It made me think through my choices in a way that I hadn't anticipated. It was an awesome experience in terms of the level of debate and engagement."

Collins says that "most divinity students are very constructive," and that her HDS conversations were always challenging rather than hostile. Moreover, her adviser, Michael Jackson, Distinguished Visiting Professor of World Religions, urged her to not separate her studies from the rest of her life, to understand the importance of her own beliefs, and to bring her personal experience into the classroom. As a result, she hopes she was able to help her classmates develop a more nuanced picture of the financial sector, and of the people who worked there.

"We would have discussions where a sweeping statement would be made about 'those financial people,' or bankers or Wall Street or capitalism," she remembers. "If you substituted any other group or philosophy in those statements, it would have been completely unacceptable. I tried to challenge my classmates in the same way that they challenged me and say, 'Hey, it can't be that simple.' The times really required the kinds of discussions we had."

While at school, Collins did research for colleagues in the financial sector that was informed by her HDS experience. She started Honeybee Capital—a research and consulting firm that reconnects investors with the world, its people, and its ecosystem—in 2009 while still a student. Collins says that, in many ways, Honeybee brings the HDS experience of ethical leadership and critical thinking into the business world.

"I want to get every investor thinking about fundamental questions with every decision they make," she says. "What is this company doing that is of real value in the world? If it's doing something worthwhile, is it with an eye to the long term, and in a way that's fair to customers, suppliers, employees, and others? Is the company involved in a good endeavor, one that's useful to the world, responsible in its activities, and not stealing from the future?"

Collins's faith in Honeybee's approach extends to the organization's remarkable business model. While many firms publish investor newsletters and charge hundreds (or thousands) of dollars for an annual subscription, Honeybee does not have a subscription fee. Collins says that she simply asks the 1,000-plus people and groups that subscribe to make a contribution that reflects the value they get from her research, whether that contribution is financial or not.

"If someone had come to me with this business plan, I would have said, 'That is not a business, and that is not a plan!' " she says, laughing. "But if I'd picked a subscription price, it would have been very low in order to get a wide audience engaged in the conversation. The contribution-based model has allowed me not only to reach as many people as want to be reached, but also to make a good living."

In the years ahead, Collins hopes to take the gospel of sustainable investing to an even larger audience. She just signed a contract with Biblio Motion of Newton, Massachusetts, to publish a book in the spring of 2014 that will take the underlying principles of biomimicry and natural systems and bring them into the world of finance. The title? "Saved by the Bee."

"All natural systems decompose into very simple chemical elements," she says. "If we'd followed a similar set of principles for investing, the mortgage market would never have gotten to the point where things became toxic because they couldn’t be broken down. My hope is that the book can help my colleagues reconnect with the world that's real, not the world that’s on their screens."

—by Paul Massari