California Public Employees' Retirement System (Calpers), the largest public pension in America by assets, has made significant changes to its tech investments. The pension fund has further increased its already substantial investment in electric vehicle (EV) manufacturers, while also adjusting its holdings in software firms. Calpers recently disclosed these stock trades in a form filed with the Securities and Exchange Commission.
EV Focus: Tesla and Rivian
In the third quarter, Calpers added to its positions in EV makers Tesla (TSLA) and Rivian Automotive (RIVN). The pension fund purchased an additional 2.3 million shares of Tesla, bringing its total holdings to 9.0 million shares. It's worth noting that Tesla's stock experienced significant volatility, with a 65% decline in 2022 followed by doubling in value in the first nine months of 2023. However, Tesla shares have dipped 14% in the fourth quarter so far.
Rivian, on the other hand, provided a positive surprise with its stronger-than-expected third quarter report in early November. The company also raised its production guidance. It's worth mentioning that Rivian had previously reduced its sales forecast for the quarter and announced plans to raise additional funds through convertible notes. In late August, Rivian CEO RJ Scaringe received a salary increase from $650,000 to $1 million per year.
Other Investment Adjustments
Aside from EV investments, Calpers also acquired additional shares of software firm Palantir Technologies (PLTR). However, the pension fund sold some of its stake in Oracle (ORCL) during the same period.
Calpers' Investment Approach
Calpers oversees assets totaling over $450 billion but declined to comment on these specific investment changes. The pension fund is currently searching for a new chief investment officer (CIO). Over the past two decades, Calpers has had at least six different CIOs, while the average tenure for investment chiefs at the 25 largest U.S. pension systems is between six to seven years.
Performance Comparison
In terms of performance, Tesla's third-quarter earnings fell short of expectations as price cuts impacted profitability. Despite this setback, analysts remain optimistic about the potential of Tesla's self-driving software as a significant driver of future business growth.
Comparing market performance, the S&P 500 index rose by 12% in the first nine months of 2023 following a 19% decline in the previous year. As of the current quarter, the index has increased by 3.0%.
Rivian Stock Performance
Rivian stock has experienced significant fluctuations in the past year. After a drastic 82% decline in 2022, the stock made an impressive comeback in the first nine months of 2023, gaining 32%. However, in the current fourth quarter, shares have decreased by 37%.
California Public Employees' Retirement System (Calpers) demonstrated increased confidence in Rivian by purchasing an additional 215,405 shares, bringing their total holdings to 976,594 shares by the end of the third quarter.
Palantir's Impressive Turnaround
Palantir stock has seen a remarkable turnaround over the past year. After a steep 65% decline in 2022, the stock surged by an astounding 150% in the first nine months of 2023. In the present fourth quarter, shares have already increased by 23%.
Furthermore, Palantir received a significant boost from its strong earnings reports this year. CEO Alex Karp expressed great optimism about the company's future, stating that Palantir aims to become "the most important enterprise company in the world," largely driven by its advancements in artificial intelligence.
The pension fund also exhibited confidence in Palantir as it acquired an additional 758,727 shares during the third quarter, resulting in a total holding of 3.5 million shares.
Oracle's Recent Challenges and Resilience
Oracle faced some setbacks earlier this year when a disappointing fiscal-first-quarter report and outlook caused a dramatic decline in the company's stock, marking its worst single trading day in two decades. However, Oracle swiftly recovered when it reaffirmed its forecast for $65 billion in revenue by the May 2026 fiscal year during the annual Oracle Cloud World conference in late September. Additionally, they secured a $1.5 billion AI pact, demonstrating their commitment to innovation.
Despite the challenges, Oracle managed to recover admirably, with a 30% increase in stock value during the first nine months of 2023, effectively offsetting the 6.3% drop experienced in 2022. Furthermore, in the fourth quarter, shares have already risen by 6.7%. Calpers decided to adjust its investment strategy by selling one million Oracle shares during the third quarter, reducing its holdings to seven million shares.
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