One of the largest public pensions in the U.S. recently made big changes in its stock investments.
The New York State Teachers’ Retirement System cut its holdings of the videogame retailer GameStop (ticker: GME), and dramatically increased its investment in Moderna (MRNA), known for its Covid-19 vaccine, in the third quarter. NYSTRS, as the pension is known, also initiated investments in ride-hailing company Lyft (LYFT), and DigitalBridge Group (DBRG), a real-estate investment trust focused on digital infrastructure.
NYSTRS disclosed the stock trades in a form it filed with the Securities and Exchange Commission. It declined to comment on its individual stock holdings. The pension, with $120.5 billion in net assets as of June 30, 2020, is one of the 10 largest public retirement funds in the U.S.
The pension sold 13,601 GameStop shares in the third quarter, cutting its investment to 61,150 shares. GameStop stock rocketed more than ninefold in price in the first nine months of the year, and so far in the fourth quarter, shares have gained 21.5%. For comparison, the S&P 500 index rose 15% in the first nine months of 2021, with a gain of 9.1% so far this quarter.
GameStop stock began to take off in January as a so-called meme stock, shares that took off as small investors exchanging ideas on social-media sites and discussion boards such as Reddit bought in, triggering gains that forced traders who had bet on declines to buy. GameStop’s new CEO didn’t have specific operational plans on his first quarterly conference call in September. A month later, Chief Operating Officer Jenna Owens left GameStop, less than a year after joining. No reason was given for her departure, and her duties will be absorbed by the remaining management team.
NYSTRS bought 375,366 Moderna shares to end September with 377,466 shares. Moderna stock rose nearly four times in price in the first nine months of 2021, but so far in the fourth quarter, shares are down 38%.
Moderna’s sales missed forecasts last week, sending shares tumbling. The company also said recently that regulatory approval for its Covid-19 vaccine for use in adolescents aged 12 to 17 could be delayed until January after the Food and Drug Administration said it needed additional time to evaluate the data. Moderna has positive data from a trial that included children aged six to 11.
Lyft stock rose 9.1% in the first nine months of the year, and so far in the fourth quarter shares are flat. Lyft’s third-quarter report was stronger than expected. The company also noted that it was seeing an improvement in the supply of drivers, after many had opted out during the pandemic. Still, pricing remains elevated for ride-hailing customers.
NYSTRS bought 219,184 Lyft shares in the third quarter. It hadn’t owned any at the end of the second.
The pension also disclosed a new position in DigitalBridge of 2.4 million shares. DigitalBridge stock rose 25.4% in the first nine months of the year. So far in the fourth quarter, shares have gained 27.2%.
DigitalBridge reported a strong third quarter last week. Raymond James analyst Ric Prentiss reiterated a Strong Buy rating on the shares with a $9 price target. “With a stock still discounted due to legacy-asset headwinds (despite about 98% pro forma rotation), execution risk on capital deployment, and current lack of dividend (but coming back in 2022), we see upside to the valuation,” Prentiss wrote.
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.
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