The largest fund in New Jersey’s embattled pension sold Apple, Microsoft, and GE stock in the second quarter. It also initiated a stake in biotech Moderna.
Photograph by Justin Sullivan/Getty ImagesThe Garden State’s embattled state pension made some big investment moves in the second quarter.
State of New Jersey Common Pension Fund D, the pension’s largest fund by assets, cut back on Apple (ticker: AAPL), Microsoft (MSFT), and General Electric stock (GE) in the quarter. The pension also initiated a position in biotech Moderna (MRNA). It disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.
New Jersey’s Division of Investment, which manages the pension, didn’t respond to a request for comment. Fund D’s assets stood at $52.3 billion as of June 30, 2019, out of the pension’s total assets of $89.6 billion. But the pension’s fiduciary net position as a percentage of the total pension liability was only 39.73% at that date, meaning the pension has only 40 cents for every dollar it owes. That is an improvement from 38 cents for every dollar owed the previous year.
Fund D sold 281,572 Apple shares in the second quarter, lowering its investment to 3 million shares of the iPhone maker.
Apple stock slipped about 15% in the first quarter as the coronavirus pandemic roiled the market. But shares have been on a tear since and now sport a 51.4% year-to-date gain through Friday’s close, including a 21.8% rise in the third quarter. By comparison, the S&P 500 index, a measure of the broader market, is up 3.7% year to date, including an 8.1% gain in the third quarter.
Apple crushed second-quarter earnings estimates, and declared a four-for-one stock split. The news lifted shares to new highs. Recently, CEO Tim Cook seemed to face less scrutiny than his peers as Big Tech testified before Congress.
New Jersey’s pension fund sold 315,424 Microsoft shares, ending June with 5 million shares of the software giant.
Microsoft stock surged 29% in the second quarter after a flat first. In the third, shares are up 4.4%.
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Microsoft shares recently rallied on news the company was planning to buy some of the operations of social-media giant TikTok, which is owned by Beijing-based firm ByteDance. President Donald Trump has said the U.S. government should get a cut of the purchase price, triggering anger in China.
GE stock has been pummeled, and has lost 43% of its market value this year.
GE’s second-quarter report was lackluster, in line with other aerospace suppliers’ stocks, but the company showed impressive cash management. A company subsidiary is working on Covid-19 treatments. In June, GE replaced its auditor.
New Jersey’s fund sold 353,822 GE shares to lower its investment to 6 million shares at the end of the second quarter.
The pension bought 148,407 Moderna shares in the second quarter. It hadn’t owned any shares of the biotech at the end of the first quarter.
Moderna stock has nearly quadrupled this year on hopes the company can develop a Covid-19 vaccine. Efficacy data could be available by Thanksgiving, and a Moderna vaccine could be with distributors in 2021. At least one analyst thinks Moderna stock is unattractive, despite saying its vaccine has high odds of receiving approval from the Food and Drug Administration.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.
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