Reference no: EM133306313

You co-manage a portfolio for a family office interesting in maximizing inter-generational wealth. This means you are trying to maximize wealth across generations rather than at any point in time. In addition to your input, the portfolio management committee is comprised of two other managers: Mr. Bear and Mr. Bull.

The family's main source of wealth is from the sale of natural gas. The family owns significant land underneath which ample reserves of natural gas exist. Estimates by leading geologists suggest at least 30years worth of natural gas are contained in the land (assuming the current pace of extraction continues). Currently, the family office is the sole owner of the company, "NG Co.", which extracts and processes this natural gas for sale on world markets.

In addition to holding all the equity in NG Co., the only other component of the family office's portfolio is currently US T-bills. The portfolio management committee has recently called a meeting regarding what, if any, changes should be made to the portfolio's asset composition. The views of Mr. Bear and Mr. Bull are:

Mr. Bear: With the ESG movement well underway, the family office should divest its shares in NG Co., and completely switch to green energy. Due to ESG and broader concerns around climate change our natural gas reserves will quickly depreciate in value. Best to monetize them now and re-focus our portfolio.

Mr. Bull: The family-office should double-down and invest more in NG Co. Given the unprecedented rise in natural gas prices - in part due to geopolitical events in Russia and Ukraine - natural gas and companies which extract it are a great investment. The family office should liquidate some of its US T- Bills and expand NG Co's capacity as much as possible.