The University of Cambridge’s wealthiest constituent college, Trinity College Cambridge, has decided to divest from all arms companies, Middle East Eye can reveal.
MEE has learnt from three well-informed sources close to Trinity’s student union that the college council, responsible for major financial and other decisions, voted to remove Trinity’s investments from arms companies in early March.
According to the sources, the college decided not to announce that it would divest from arms companies after an activist defaced a 1914 portrait of Lord Arthur Balfour - who authored the infamous Balfour Declaration - inside the college on 8 March.
The stock value is a relevant metric to assess the credit worthiness of a company. Large profitable companies run a lot of their business on loans. In fact in order to achieve high profit margins it is encouraged as the return on investment is a margin of equity.
If you invest 100 dollar and you do business giving you back 110 dollar, you have a 10% margin.
If you invest 200 dollar, of which 100 are your equity and 100 are borrowed and you get back 220 dollars and pay 5% interest on the borrowed money, you have 15 dollars on your 100 dollar equity. Now your margin is 15%.
So many companies run a significant portion of their business on borrowed money. You hurt their ability to borrow, you hurt their business directly. And this can create a downward spiral. Loans get more expensive to margin gets smaller so more people divest so loans get more expensive…