Tags: Barron’s | Calpers | FANG | Stocks | Apple | Price | Surge

Barron's: Calpers Sells the FANG Stocks, Apple Before Price Surge

Image: Barron's: Calpers Sells the FANG Stocks, Apple Before Price Surge
(Getty/Max Whittaker)

By    |   Wednesday, 17 May 2017 01:57 PM

America’s largest public pension fund reportedly has trimmed back on "FANG" stocks and Apple just as Facebook, Amazon, Netflix and both classes of Alphabet have surged.

California Public Employees’ Retirement System, or Calpers, reportedly has cut back on Facebook (FB), Amazon.com (AMZN), Netflix (NFLX) and both publicly traded classes of Alphabet (GOOGL, GOOG ) stock in the first quarter, Barron's reported.

"The tech-friendly market run, however, has caused these smaller equity positions to all surge in value from the fourth-quarter regulatory filing. Calpers as of March 31 owned $676 million in Facebook stock, up 21% from Dec. 31, although it now owns 4.76 million shares—nearly 84,000 shares fewer. The position in Amazon, 790,000 shares, gained $100 million in value to $700 million even as the fund sold nearly 14,000 Amazon shares. Calpers sold 13,000 Netflix shares, only to see its investment rise more than 17% in value to $117 million," Barron's reported.

"Calpers now has more than $1 billion invested in Alphabet, up from $986 million, slightly more in the class A shares, which trade as GOOGL, than the class C shares, which trade as GOOG. It now holds 632,000 class A shares and 594,000 class C shares; both share positions have been trimmed about 3%," the report said.

"The fund’s investment in Apple (AAPL), whose homegrown surge into previously unknown territories of market capitalization is the pride and joy of the Golden State, remains the top stock holding at $1.78 billion, up 20% from Dec. 31, even though it now holds 12.4 million shares, 3% fewer shares," Barron's reported.

The fund’s second-largest investment, Microsoft (MSFT), inched up 1% to $1.14 billion, although Calpers pared its share holdings by more than 4%.

These investments, reported on a Form 13F, represent a portion of the Global Equity asset class of Calpers’ investments. Global Equity accounts for about $150 billion out of Calpers’ overall $321 billion total market value.

To be sure, California residents seemingly won’t be pleased with the financial outcome of Calpers’ trading strategy that resulted in apparently missed gains.

California cities and counties will see their required contributions to the largest U.S. pension fund almost double in five years, according to an analysis by the California Policy Center.

In the fiscal year beginning in July, local payments to the California Public Employees’ Retirement System will total $5.3 billion and rise to $9.8 billion in fiscal 2023, according to the right-leaning group that examines public pensions, Bloomberg reported.

The increase reflects Calpers’ decision in December to roll back the expected rate of return on its investments. That means the system’s 3,000 cities, counties, school districts and other public agencies will have to put more taxpayer money into the fund because they can’t count as heavily on anticipated investment income to cover future benefit checks.

Calpers hasn’t calculated the dollar impact of reducing the investment return over the years, said the group, which derived its estimate from guidance the system sent in January.

Including the costs paid by cities and counties that run their own systems, the fiscal 2018 tab will be at least $13 billion to meet retirement obligations for public workers, according to the analysis, which is based on actuarial reports and audited financial statements.

Barring any changes to pensions, "several California cities and counties will find themselves forced to slash other spending," the group wrote in its report. "The less fortunate will simply be unable to pay the bills they receive from Calpers or their local retirement system."

Facebook, Amazon, Netflix and both classes of Alphabet have surged. Apple remains the biggest holding.

America’s largest public pension fund has spoken, and it says trim back on FANG stocks and Apple.

(Newsmax wire services and Bloomberg contributed to this report).

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California Public Employees' Retirement System, or Calpers, reportedly has cut back on Facebook (ticker: FB), Amazon.com (AMZN), Netflix (NFLX) and both publicly traded classes of Alphabet (GOOGL, GOOG ) stock in the first quarter.
Barron’s, Calpers, FANG, Stocks, Apple, Price, Surge
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2017-57-17
Wednesday, 17 May 2017 01:57 PM
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