America's largest public pension fund by assets increased positions in some of its largest stock investments in the third quarter.
California Public Employees' Retirement System bought more shares of Apple, Intel, Microsoft $(MSFT)$, and $General Electric(GE)4 stock. Calpers, as the pension is known, disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.
Calpers declined to comment on the investment changes. The pension managed $440 billion in assets as of June 30, the end of its fiscal year. At that time, Calpers estimated that its funded status was 72% -- meaning it had 72 cents on hand for every dollar of obligation. That's actually better than average. A study by the Pew Charitable Trusts using 2020 data showed that state pensions were 69.5% funded, on average.
The pension bought 5.4 million more Apple shares to end the third quarter with 35.3 million shares of the iPhone maker. Apple stock slid 22% in the first nine months of the year, compared with a 25% drop in the S&P 500 index. So far in the fourth quarter, shares are up 8.3% compared with an 11% rise in the index.
Apple's results for the quarter ended in September, disclosed in late October, were slightly better than expected. The company also stepped up stock repurchases to a record. But earlier this month, Apple warned that iPhone production was being disrupted by Covid-19 restrictions in China, sending shares sliding.
Meanwhile, Intel has been hurt by the winding down of the pandemic because a a surge in demand for better computers triggered by the shift to working from home has faded away, cutting into demand for semiconductors. Management issued a disappointing financial forecast late in October, overshadowing the chip giant's third-quarter report. Also late last month, Intel spun off its autonomous-car unit Mobileye $(MBLY)$.
Calpers bought 1.7 million additional Intel shares to end the third quarter with 11.1 million shares. Intel stock plunged 50% in the first nine months of 2022, and so far in the fourth quarter shares are up 18%.
The pension also bought 2.3 million more Microsoft shares in the quarter to lift its investment to 18.9 million shares of the software giant. Microsoft stock tumbled 31% in the first nine months of the year, and so far in the fourth quarter shares are up 6.1%.
Microsoft shares slipped in late October after it reported quarterly growth in its cloud segment that disappointed analysts and investors. Management's financial guidance also fell short. Earlier this month, a trade group filed an antitrust suit against Microsoft with the European Commission, alleging anticompetitive behavior. Its pending acquisition of game publisher Activision Blizzard $(ATVI)$ continues to await antitrust approvals.
GE, on the other hand, is pursuing a strategy to split into three, a process set to start next year. One segment will be dedicated to aviation, another to power generation, and a third to healthcare. The conglomerate's third-quarter earnings, reported at the end of October, included one-time items, and reduced forecasts, but analysts were pleased by what they saw.
Calpers bought 396,145 more GE shares to end the third quarter with 2.5 million. GE stock slid 34% in the first nine months of the year. So far in the fourth quarter, the stock is up 39%, propelled by a favorable climate for so-called cyclical stocks, those that perform well when the economy is gaining strength. A reading of lower-than-expected inflation last week might mean the Federal Reserve can ease off on interest-rate hikes.
Inside Scoop is a regular Barron's feature covering stock transactions by corporate executives and board members -- so-called insiders -- as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
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