The California State Teachers’ Retirement System (Calstrs), the second-largest public pension in the US by assets, has made significant changes to its investment in electric vehicle (EV) manufacturers. In the second quarter, Calstrs increased its holdings in Rivian Automotive (ticker: RIVN), Nikola (NKLA), and Lucid Group (LCID), while reducing its investment in Workhorse Group (WKHS). The pension fund disclosed these stock trades, among others, in a filing with the Securities and Exchange Commission.
Calstrs, not providing specific comments on the investment changes, stated that their public equity portfolio utilizes both passive and active strategies. The portfolio’s holdings can be subject to change due to various reasons, including managers rebalancing exposure or corporate actions such as mergers, stock splits, or name changes.
As of July 31, Calstrs’ investment portfolio was valued at approximately $321.3 billion. During the second quarter, the pension fund acquired an additional 387,822 Rivian shares, bringing its total shares to 988,777.
While Rivian stock experienced a 10% decline in the first half of the year compared to the S&P 500 index’s 16% rise, it has shown promise in the third quarter with an 18% increase, while the index slipped 1.7%. Nevertheless, Rivian is working to recover from an 82% drop in 2022.
Rivian’s strong delivery performance in the second quarter, reported in early July, contributed to the rise in share prices. Additionally, a short squeeze phenomenon, fueled by unsuccessful bets against the company’s stock, also appeared to have a positive impact.
On the other hand, Nikola stock initially saw a surge in the third quarter but faltered due to significant events on August 3 and 4. Shareholders approved an increase in the company’s outstanding shares, allowing Nikola to raise capital through stock sales, which would dilute the stakes of existing shareholders. Moreover, the sudden resignation of Nikola’s CEO further affected the stock’s performance.
During the first half of 2023, Nikola stock declined by 36%, and in the third quarter, shares are down 11%. Overall, the stock suffered a significant decline of 78% in 2022.
Calstrs Boosts Holdings in Nikola and Lucid
Calstrs, the pension fund, increased its stake in electric vehicle (EV) manufacturers Nikola and Lucid during the second quarter. The fund bought an additional 221,367 shares of Nikola, bringing its total holdings to 641,827 shares. Additionally, it purchased 616,797 more shares of Lucid, raising its investment to 1.4 million shares.
Lucid Faces Challenges
Although Lucid’s stock remained steady in the first half of the year, it has experienced a significant decline in the third quarter, with shares dropping by 15%. In fact, the stock has already plummeted by 82% this year. To address this situation, Lucid recently lowered the prices of its Air luxury sedans. However, this move has raised concerns about the company’s demand. As a result, Exane BNP Paribas analyst James Picariello downgraded Lucid stock from Hold to Sell, and revised the price target downward to $5 from $6.50.
Calstrs Reduces Stake in Workhorse
While Calstrs showed interest in EV manufacturers, it scaled back its investment in Workhorse during the second quarter. The pension fund reduced its stake in Workhorse from 200,679 shares to 55,201 shares. This decision was likely influenced by the stock’s poor performance, as it fell by 43% in the first half of 2023 and continued to decline by 16% in the third quarter. In total, Workhorse’s shares dropped by 65% in 2022.
Workhorse attributed its struggling stock to disappointing quarterly reports and lowered guidance. Moreover, the company has requested shareholder approval for a proposal to increase the number of outstanding shares, as it seeks financing to pursue its future plans. The stock is currently lingering close to a multiyear low of 70.9 cents, which it hasn’t reached since April 2019.
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