The largest public pension in the U.S. made significant changes in its investment portfolio, increasing its holdings of volatile stocks.
The California Public Employees' Retirement System bought more shares of videogame firm Roblox (ticker: RBLX), electric-vehicle maker Lucid Group $(LCID)$, and PC giant HP $(HPQ)$, while it cut about a fifth of its holdings in the chip manufacturer Intel $(INTC)$ in the second quarter. Calpers, as the pension is known, disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.
Calpers said it doesn't comment on its individual holdings. It manages assets of about $467 billion.
Roblox stock soared 42% in the first half of 2023, compared with a 16% rise in the S&P 500 index. So far in the third quarter, shares have plunged 26%, while the index is flat. In 2022, Roblox stock crumbled 72% while the S&P 500 dropped 19%.
The two latest quarterly reports from Roblox -- one in the past week and the other in May -- both disappointed. The drop in share price after the most recent quarter evaporated nearly all of 2023's gains. In May, the company drew fire from a children's advertising watchdog for allegedly not informing its users that some content in games was advertising."Roblox has robust policies and procedures that far exceed its legal obligations in order to create a safe environment for all users," the company said in a statement at the time.
Calpers bought 276,271 more Roblox shares in the second quarter to end June with 831,093 shares. If the pension still owns those shares, they've dropped about $9 million in value -- to $24.8 million from $33.5 million -- since June 30.
The pension bought 170,435 more Lucid shares to end the second quarter with 1 million shares.
Lucid stock has bounced back from a 52-week intraday low in June, but price cuts and a disappointing second-quarter report have pressured shares recently. Barron's has noted that Lucid might have an easier time if it sold cars priced at $400,000 rather than $100,000.
Lucid stock was flat in the first half of 2023, following a 82% plunge in 2022. So far in the third quarter, shares are down 3.6%.
HP stock rose 14% in 2023's first half, after a 29% drop last year. So far in the third quarter, shares are up 6.7%.
HP's earnings report for its fiscal second quarter, issued at the end of May, missed analysts' estimates. PC shipments in the second quarter remained weak, but HP and Apple $(AAPL)$ both outperformed the industry. CEO Enrique Lores expects PC demand to rebound after sagging at the end of the pandemic surge.
Calpers bought 842,460 more HP shares to end the second quarter with 2.9 million.
The pension sold 2 million Intel shares to end June with 7.8 million shares. Intel stock soared 26.5% in the first half of 2023, after a 49% dive in 2022. So far in the third quarter, shares are up 4.3%.
Intel CEO Pat Gelsinger has been buying up shares this year, while Intel itself has been reducing its investments in a onn-demand video-products firm and a maker of flying cars. Some observers think Intel needs to focus more on artificial intelligence for growth.
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.
