America’s second-largest public pension fund has recently adjusted its U.S. stock portfolio.
The California State Teachers’ Retirement System (CalSTRS) increased its holdings in the Chinese e-commerce company PDD Holdings, and also purchased additional shares in Discover Financial Services and Williams-Sonoma. Conversely, it reduced its investment in American Airlines Group during the first quarter. These stock transactions were disclosed in a filing with the Securities and Exchange Commission.
In response to an inquiry, CalSTRS explained, “Our public equity portfolio uses passive and active strategies. 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.”
As of April 30, CalSTRS managed assets worth approximately $332.5 billion, making it the second-largest public pension in the U.S. by assets.
In the first quarter, American depositary receipts of PDD fell 21%, while the S&P 500 index increased by 10%. In the second quarter, PDD shares have risen 29%, while the index remained flat.
Temu, a subsidiary of PDD, has seen rapid growth since entering the U.S. market in 2022, according to The Wall Street Journal. In late May, PDD reported strong first-quarter earnings.
CalSTRS added 36,600 more PDD ADRs, ending the first quarter with 217,300 ADRs.
The pension also acquired 36,940 additional shares of Discover, bringing its total to 404,850 shares.
In February, Capital One Financial agreed to buy Discover for over $35 billion in stock, combining two of the largest U.S. credit-card companies. This deal is expected to close in late 2024 or early 2025. Michael Rhodes, Discover’s CEO and president, resigned in March to become CEO of Ally Financial.
Discover’s stock rose 17% in the first quarter but has declined 6.4% in the second.
Williams-Sonoma shares surged 57% in the first quarter and have dropped 7.7% so far in the second.
The retailer’s stock jumped in mid-March following a strong quarterly report, an increased dividend, and an expanded stock-buyback plan. However, subsequent softness at its Pottery Barn and West Elm chains overshadowed its earnings.
CalSTRS bought 16,560 more Williams-Sonoma shares, ending the first quarter with 81,940 shares.
The pension sold 41,770 American Airlines shares in the first quarter, reducing its stake to 218,250 shares.
American Airlines’ stock initially surged following a strong earnings report in January, but later fell after the airline lowered its guidance and announced the departure of an executive involved in a failed business-travel strategy.
American Airlines stock increased 12% in the first quarter but has declined 25% in the second.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives, board members, large shareholders, politicians, and other prominent figures. These investors must disclose their stock trades to the Securities and Exchange Commission or other regulatory bodies.
