The California State Teachers’ Retirement System (Calstrs), the second-largest U.S. public pension by assets, recently made significant changes to its stock investments. In the third quarter, Calstrs reduced its investment in theater chain AMC Entertainment Holdings and trimmed positions in Chinese electric-vehicle maker NIO, streaming-content firm Spotify Technology, and pharmaceutical firm Johnson & Johnson. These stock trades were disclosed by Calstrs in a form filed with the Securities and Exchange Commission.
Calstrs has not provided any specific comments on these investment changes. However, the pension did mention that its public equity portfolio utilizes both passive and active strategies. The portfolio holdings are subject to change due to various reasons, such as managers rebalancing exposure to desired active or index weights or corporate actions like mergers, stock splits, name changes, or similar activities. As of October 31, Calstrs’ total investment assets stood at $304.9 billion.
To cut its stake, Calstrs sold 485,753 AMC shares in the third quarter, reducing its position to 145,246 shares. AMC, once a highflying meme stock, has faced several challenges this year. The company carried out a reverse stock split (1:10) and converted preferred equity units into common shares in August. These measures were intended to strengthen the balance sheet by allowing new stock sales. Furthermore, AMC CEO Adam Aron revealed in October that he had been targeted in a blackmail plot.
In terms of performance, AMC stock experienced a significant downturn with an 80% drop in the first nine months of 2023. In the fourth quarter, shares have seen a decline of 14%. In comparison, the S&P 500 index grew by 12% in the first nine months of 2023 and has gained 7.1% so far in the fourth quarter.
As for NIO, the American depositary receipts (ADRs) slipped 7.3% in the first nine months of 2023 and are down 21% in the fourth quarter. To conclude the third quarter, Calstrs sold 88,160 NIO ADRs, leaving it with 317,152 ADRs.
NIO ADRs and Trade Tensions: What to Expect in December
NIO ADRs, along with other China-based firms, experienced a significant downturn in November following a high-stakes meeting between Chinese President Xi Jinping and President Biden. While the talks appeared to be smooth, little was publicly discussed regarding trade tensions and retaliatory tariffs between the two countries. Despite these challenges, NIO’s electric vehicle (EV) deliveries have remained strong.
However, NIO’s second-quarter earnings report in August was a disappointment, leaving investors eager for the upcoming third-quarter earnings announcement on December 5th. This highly anticipated report is scheduled to be released before the market opens, providing valuable insights into the company’s performance.
Spotify’s Surprising Profitability and Future Prospects
Despite potential obstacles, Spotify’s stock has doubled during the first nine months of 2023, and in the fourth quarter alone, shares have surged by 17%. Calstrs, a prominent investor, decided to sell 15,841 Spotify shares, leaving them with 31,231 shares by the end of the third quarter.
Evaluating Johnson & Johnson’s Performance and Future Plans
During the third quarter, Calstrs also made significant moves regarding their Johnson & Johnson investment. They sold 472,013 shares of the company, reducing their overall stake to 3.8 million shares. It’s worth noting that Johnson & Johnson’s stock experienced a 12% decline in the first nine months of 2023. However, during the fourth quarter, there has been a slight recovery with shares increasing by 1.7%.
In a separate development, Johnson & Johnson faced some challenges when it attempted to spin off Kenvue, its consumer-health business. This move was initially praised, but unfortunately, it led to a slide in Johnson & Johnson’s stock price. The company reached a multiyear intraday adjusted low of $144.95 in late October, a level not seen since November 2020. Nevertheless, Johnson & Johnson remains committed to strengthening its work through data science and artificial intelligence initiatives.