Tuesday, March 03, 2009

NYS Teachers' Retirement Top Holdings

The NYS Teachers' Retirement System has started updating their holdings at the end of each quarter which is a substantial improvement over their old system of annual updates. You can find the link here ..........However, I'm not sure many retirees or teachers want to see this chart. I didn't look at the debt ($16 billion) or international holdings (under a billion), but a look at the top 11 investments (by costs) of the Teachers fund reveals a number of stocks that have been in the news a bit lately...

1. Microsoft - 24 million shares held at an average price of $16.48 (total cost - $404 million)

Today's price - $16 - break even

2. Google - 752 thousand shares held at an average price of $425.31 ( $320 million)

Today's price - $327 ($73 million loss - approximate)

3. General Electric - 32.7 million shares at an average price of $8.84 ($289 million)

Today's price - $7 ($60 million loss)

4. AT&T - 20.6 million shares at an average price of $12.46 ($257 million)

Today's price - $23 $200 million gain

5. Pfizer - 22.8 million shares at an average price of $10.87 ($247 million)

Today's price - $12 $20 million gain

6. Bank of America - 15.5 million at an average price of $14.89 ($231 million)

Today's price - $4 - ($150 million loss)

7 AIG - 7.9 million shares at an average price of $25.65 ($203 million)

Today's price - $0.48 ($200 million loss)

8. JPMorgan Chase - 11.5 million shares at an average price of $17.50 ($200 million)

Today's price - $21 $45 million gain

9. Proctor and Gamble - 9.6 million shares at an average price of $20.59 ($198 million)

Today's price - $47 $250 million gain

10. Verizon - 9.2 million shares at an average price of $20.96 ($192 million)

Today's price - $27 $55 million gain

11. Citigroup - 17 million shares at an average price of $10.83 ($184 million)

Today's price - $1.28 ($160 million loss)

Wow, the managers of the fund can't be faulted for investing in a number of these stocks that were the bluest blue chips, but holding them all the way down is unacceptable.

I think it will be interesting to see if the fund still holds these stocks as of 3/31.

I'll note that because the fund has enjoyed great success in recent years it still has a substantial gain on it's total portfolio (above $7.5 billion) but if the managers made such huge mistakes on firms like Citigroup and AIG it makes me question if they are ever any good or were they just lucky in past years?

Cheers!

UPDATE: I thought it was a little unfair to show just the 11 highest investments by dollar value without showing the funds 11 largest positions by market value. There are some huge gains on these holdings which were probably bought many, many years ago (for example, the average cost of an Exxon Mobil share is listed as below $11. Exxon hasn't trade at those levels since the late 80's).

I thought I'd show a chart with the gain on the investment as of 12/31, that gain today if the fund has not bought or sold any shares since 12/31 (purely hypothetical) and then the net change between these numbers

Gain as of 12/31 Gain as of 3/3 Change

1) Exxon Mobil $1.17 billion $911 million ($258 million)
2) Proctor & Gamble $397 million $250 million ($146 million)
3) AT&T $330 million $206 million ($125 million)
4) General Electric $241 million ($60 million loss) ($300 million)
5) Johnson & Johnson $354 million $247 million ($107 million)
6) Chevron $367 million $257 million ($110 million)
7) Microsoft $ 72 million ($14 million loss) ($87 million)
8) Pfizer $156 million $21 million ($135 million)
9) Walmart $223 million $159 million ($63 million)
10) JP Morgan Chase $161 million $38 million ($122 million)
11) IBM $217 million $232 million $15 million

sorry for the chart - Blogger has yet to grasp the value of tab inserts....

So under this hypothetical analysis the fund would be down $1.4 billion in the first two months of the year on it's 11 largest holding by value. Most of these companies are sound just suffering from a weak economy (but GE looks pretty shaky) so these look like core holdings - it will be interesting to see in early April when they update the holdings if they have increased or reduced any holdings. Again, note the fund still has a gain on all of these holdings (except GE and Microsoft) but their gain has been reduced if they've held on through the latest dip.

Cheers again!

2 comments:

Anonymous said...

Are you saying that the fund runners should sell off the stock that is wayyy down? Isn't that the complete opposite of what everyone should be doing?!?!!?

Buy low - sell high is the strategy. Everything will bounce back; history says it will...its been a repetitive pattern and its tough to argue with.

Hold on teacher fund!! :-)

The Artful Blogger said...

With regards to Citigroup and AIG that is is exactly what I would imply. Those stocks are likely going to be worthless and holding them is silly.

The managers have had countless opportunities over the past six months to cut their losses. Skilled financial management includes not just achieving gains, but also limiting losses and I don't think losing $200 million on AIG is an example of prudent management, but that's just my opinion.

The old buy and hold strategy worked from 1982-2008 but it's a broken model. Managers need to be increasingly nimble in today's market.

Like I said, there are still substanitial assets in the retirement system, so it's not a point of panic but I think I'd question my retirement manager if they owned AIG from $70 to $0.50 and didn't sell any (I don't know whether or not the NYSTRS sold any on the way down).

Thanks for the comment!