The decision whether or not to buy shares in the secondary market will make little difference to existing coal companies (who are largely cash flow positive and trade at near 25% earnings yields). Regulations are what matter. All that secondary investors can do is increase WACC via lowered demand for marginal primary debt/equity issuances. If you want to phase out coal, focus on government regulation instead of secondary investments.

It can (and often does) make sense to invest in industries in terminal decline as price paid for an asset’s cash flow is the primary determinant if returns for the investor. You can buy coal stocks for 25%+ earnings yields. Even if those plants are phased out in 6 or 7 years, one can make solid returns.

Indeed I have invested in cigarette shares in the past while wishing the government would do more to stop smokers. The fact that I hold the equity doesn’t change demand for cigarettes, and only in aggregate does the investor appetite effect WACC. Someone must always hold existing shares. For every buyer there is a seller and vice versa.

Lastly I should mention that metallurgical coal as opposed to thermal coal is a necessary “evil” to smelt steel.

I’ve used this recent hate for coal investments(and weakness in NG) to take positions at high earnings yields in ARCH and HCC.