The second-largest U.S. public pension by assets recently made material changes in its stock investments.
The California State Teachers’ Retirement System drastically reduced an investment in theater chain AMC Entertainment Holdings, and trimmed positions in Chinese electric-vehicle maker NIO, streaming-content firm Spotify Technology, and pharmaceutical firm Johnson & Johnson in the third quarter. Calstrs, as the pension is known, disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.
Calstrs declined to comment on the specific investment changes.
“Our public equity portfolio uses passive and active strategies,” the pension said in an emailed statement. “The portfolio’s holdings can change for many reasons, including managers rebalancing exposure to desired active or index weights or due to corporate actions, such as a company merger, stock split, name change or similar activity.” Calstrs’ total investment assets stood at $304.9 billion as of Oct. 31.
Calstrs sold 485,753 AMC shares in the third quarter to cut its stake to 145,246 shares.
A former highflying meme stock, AMC has seen a raft of issues this year. The company reverse split its shares, one for 10, and converted preferred equity units into common shares in August. The moves were intended to allow the company to sell new stock to help shore up the balance sheet. There are other challenges, as AMC CEO Adam Aron said in October that he had been the target of a blackmail plot.
AMC stock dove 80% in the first nine months of 2023, and so far in the fourth quarter shares are down 14%. For comparison, the S&P 500 index rose 12% in the first nine months of 2023, and so far in the fourth quarter the index has gained 7.1%.
American depositary receipts of NIO slipped 7.3% in the first nine months of 2023, and so far in the fourth quarter they are down 21%. Calstrs sold 88,160 NIO ADRs to end the third quarter with 317,152 ADRs.
NIO ADRs slumped, along with those of other China-based firms, in November after a high-stakes meeting between Chinese President Xi Jinping and President Biden. The talks seemed smooth, but little was publicly said about trade tensions and retaliatory tariffs between the two countries. NIO’s EV deliveries have been strong. NIO’s second-quarter earnings, reported in August, disappointed, and the company is set to report third-quarter earnings on Dec. 5, before the market opens.
A strong third-quarter report lifted Spotify stock in late October, and investors were surprised the company was profitable for the period. Revenue and subscriber growth were also better than expected. The previous quarter had showed robust new-user growth, although numbers disappointed on other fronts. However, Monness, Crespi, Hardt & Co. analyst Brian White recently wrote that Spotify’s “darkest days” are ahead.
Nonetheless, Spotify stock doubled in the first nine months of 2023, and so far in the fourth quarter shares are 17% higher. Calstrs sold 15,841 Spotify shares to end the third quarter with 31,231 shares.
The pension sold 472,013 Johnson & Johnson shares in the third quarter to trim its investment to 3.8 million shares. Johnson & Johnson stock slipped 12% in the first nine months of 2023, and so far in the fourth quarter they are up 1.7%.
When Johnson & Johnson planned earlier this year to spin off Kenvue, its consumer-health business, we applauded the move. But Johnson & Johnson stock slid, setting a multiyear intraday adjusted low of $144.95 in late October; shares hadn’t traded at that level since November 2020. Nonetheless, Johnson & Johnson is making a big bet on data science and artificial intelligence to bolster its work.
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.
Write to Ed Lin at [email protected] and follow @BarronsEdLin.News Related