Karma Banque, a left-wing organization dedicated to being a corporate gadfly, is trying to launch a $100 million hedge fund to sell short stocks it views as the biggest threats to individual freedom and environmental safety. Moreover, not content with merely saving the environment or mankind, the fund will return 98% of the profits to people and groups displaced by “past development cycles,” according to the group’s founder, Max Keiser.

The Karma Banque fund aims to force so-called exploitative corporations to the bargaining table via lowered stock prices. The current top-five targets are Coca-Cola, McDonalds, Microsoft, ExxonMobil. and Irish discount airline Ryanair.

“Bad press does not do it anymore; company managements need to be made to see there is a real economic cost for this behavior. A hedge fund is the perfect vehicle for this because they can bring billions of dollars in selling power to bear,” Mr. Keiser said. In addition to the short-selling pressure on a target stock, Karma Banque will use its Web site to rally activists to the cause. “Most activists and their groups have either forgotten or never learned the power of concentrated economic activity,” said Mr. Keiser.

The fund is to be jointly managed by Mr. Keiser, 43, a former stock-broker for PaineWebber, and the Ecologist magazine’s editor-in-chief Zachary Goldsmith. Mr. Goldsmith is the 29-year-old environmental activist son of legendary 1980s corporate raider Sir James Goldsmith. The fund will guarantee investors a return of a little over 4%, unusual in hedge fund circles.

Mr. Keiser would not elaborate on how Karma Banque will back its guarantee.

The Karma Banque fund will operate like a standard hedge fund in that it will short certain stocks – or bet that they will go down in price – and will hedge their short positions with stock options in case the price rises.

However, Karma Banque plans to short the stocks of companies it deems to be villains – Coca Cola being the current no.1.Coca-Cola plants use too much water and hurt the environment, among other things, according to the group.

Shorting the stocks of targeted companies while using the Internet to get activists worldwide to boycott targeted companies’ products will force the stock prices of these companies down, according to Mr. Keiser.

The fund will not be for the faint of heart: Shorting stocks, especially with the use of leverage, or borrowed money as Karma Banque intends to do – is one of the riskiest and most volatile strategies in the $1 trillion hedge fund market. Short-bias funds – as funds using Karma Banque’s technique are known – have had rough sledding over the last few years. Last year, the Hedgefund.net index of 26 short-bias funds was down 4.87%; in 2003, they were down 15.3%. However, if Karma Banque had already existed and sold short the companies it denotes as the 10 most socially irresponsible, it would be up 3.50% since January 1.

Though Karma Banque seeks to marry the “civil disobedience of Gandhi with the financial savvy of George Soros,” according to Mr. Keiser, its method for choosing targets is a little less lofty.

Mr. Keiser uses computer models – a common hedge fund tactic – to find the companies that are the most “ahead of themselves on a fundamental financial basis,” or vulnerable, he said. Often, these companies have stock prices that are overvalued as well, making them prime candidates for shorting anyhow, said Mr. Keiser.

The art is in determining which companies, in the words of the Karma Banque, “suck,” which it defines as being “the most narrowly focused on short-term profits at the expense of the world community.”

One of Karma Banque’s key gauges of a company’s unattractiveness is the number of activists logging onto the site and complaining about the company. However in the end, Mr. Keiser and his Web site partner – and girlfriend, Stacy Herbert, a former BBC television writer – rely on their own research.

It is just as well. The comments posted on the site are often garden-variety Euro-leftist boilerplate, as often as not pointedly anti-American or, in a few cases, anti-Israeli, often having nothing to do with a specific corporation. “It is absolutely essential that the public do all they can to boycott the products of Jews/Israeli’s and to so increase the tax burden of support of the illegal statelet of Israel, on US taxpayers,” read one quote, posted anonymously on January 5. Another, posted on December 2 by another anonymous poster, said, “The evil American Empire has reached its peak and has begun its decline. It is rotting from the inside. It is a perverse irony that the freedoms it is waging war to protect are being eroded by that very same war.”

Mr. Keiser, while he did not disavow these comments, said he considers himself an advocate for capitalism and is skeptical only of its increasing concentration of power among fewer and fewer corporations. “Capitalism is largely becoming something just for those who have large amounts of capital” he said.