The biggest challenge of buying and holding is having the discipline not to sell when stocks go down. The second-largest pension in the United States by assets has such self-control, based on its inaction on some names in the first quarter.
California’s state teachers’ pension system barely budged on its first-quarter losing stock holdings, such as
Bed bath and beyond
(BBBY), and regional banks hit hard
(IF WE). Calstrs, as the repo is known, disclosed its stock positions, among other things, in a form filed with the Securities and Exchange Commission.
The pension had assets of $311.1 billion as of April 30.
In response to a request for comment, Calstrs declined to comment on individual positions.
“Our public equity portfolio uses passive and active strategies,” the repo said. “Portfolio holdings can change for many reasons, including managers rebalancing exposure to desired active or index weightings or due to corporate actions, such as a corporate merger, stock split , name change or similar activity.”
Electric and hydrogen fuel cell truck technology company Nikola had none of those businesses, but saw a combination of disappointing quarterly reports and a CFO job change, which may be a hot seat for a beleaguered company.
Nikola shares plunged 44% in the first quarter, while
S&P 500 Index
increased by 7%. Calstrs actually bought an additional 8,167 Nikola shares to end March with 420,460 shares. While the repo still holds the shares, they have already halved again, down 52% so far in the second quarter, while the index is up 4.2%.
Nikola received a delisting notice in late May because its shares traded below $1 for 30 consecutive days, a violation of Nasdaq Stock Market requirements.
Shares of Bed Bath & Beyond fell faster than those of Nikola: Shares of the home goods retailer cratered 83% in the first quarter. The repo sold just 719 Bed Bath & Beyond shares during this period to adjust its stake to 99,097 shares. Since the end of March, the company has filed for bankruptcy and its shares have been delisted from the Nasdaq. They now trade over-the-counter, and so far in the second quarter, shares of Bed Bath & Beyond have fallen 42%.
At the end of 2022, Calstrs’ stake in Bed Bath & Beyond was valued at $250,538, but at the end of March the same number of shares was worth just $42,345. Now, if the pension stake hasn’t changed, the shares are valued at just $24,675.
Compared to this, the strained regional banking sector did not fare so badly. KeyCorp stock fell 28% in the first quarter while Zions stock fell 39%.
The falls in banking stocks did little to induce Calstrs to reduce its grip. It sold less than 1% of its stake in KeyCorp to end the first quarter with 1.6 million shares. The repo sold less than 2% of its investment in Zions to end the period with 187,860 shares.
So far in the second quarter, Zions stock appears to have stabilized a bit, falling only 3%, while KeyCorp is down 18%.
Inside Scoop is a regular Barron column that covers the stock trading of corporate executives and board members – the so-called insiders – as well as major shareholders, politicians and other high profile figures. Because of their insider status, these investors are required to disclose stock trades to the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at email@example.com and follow @BarronsEdLin.