New Jersey’s state pension sold out of a sinking bank stock before it went down another leg, and made other changes in its portfolio.
State of New Jersey Common Pension Fund D, the pension’s largest fund by assets, exited a position in
First Republic Bank
(ticker: FRC), bought more shares of theater-chain
AMC Entertainment Holdings
(AMC) and home builder
(DHI), and slashed an investment in home-furnishings retailer Wayfair (W) in the first quarter. The fund disclosed the trades in a form it filed with the Securities and Exchange Commission.
The state’s Department of the Treasury, whose Division of Investment oversees the pension, declined to comment. Pension Fund D had assets of $54.7 billion as of June 30, 2022, out of the pension’s total assets of $98.4 billion, and “invests primarily in global equity and fixed-income securities,” according to the Treasury’s latest annual report.
The fund sold the 105,884 First Republic shares it had owned at Dec. 31 to end March with no shares. The stock tumbled 89% in the first quarter, compared with a 7% rise in the
S&P 500 index.
So far in the second quarter, shares are down 75% while the index is up 1.5%.
First Republic stock dove in early March when fellow regional bank
SVB Financial Group
collapsed. After reporting late April 24 that customers pulled about $100 billion in deposits, First Republic stock tumbled again, losing half its value.
AMC stock is no stranger to volatility, but it has been an overall winner this year. Shares gained 23% in the first quarter, and another 9.8% in April.
AMC is one of the most prominent meme stocks, shares that bullish investors talk up on discussion boards and social media. A mix of more conventional business metrics and moves has been lifting the stock as of late. A smaller loss than expected sent the stock higher when the company reported fourth-quarter numbers in February. The company also announced a plan to charge more for better theater seats. Ahead of its first-quarter report on May 5, AMC is showing impressive box-office sales.
New Jersey’s pension bought 45,178 more AMC shares to end the first quarter with 370,847 shares.
The fund bought 10,000 additional DR Horton shares in the first quarter to lift its investment to 190,387 shares. DR Horton stock tacked on 9.6% in the first quarter, and added 12% so far in April.
Although mortgage rates remain elevated in the wake of several Federal Reserve hikes, they are now slightly lower. New homes may be seeing elevated demand due to a lack of existing homes for sale. In fact, the National Association of Realtors said in a report earlier this month that “[s]ales of new homes are already matching 2019 pre-Covid activity and are expected to increase in 2023, largely due to plentiful inventory in this segment of the market.”
New-home sales may be holding up, but Wayfair has seen fewer customers for its home furnishings. It has been racking up losses and laying off workers. Cutting staff has lifted Wayfair shares. The stock rose 4.4% in the first quarter, and so far in the second it is up 1.4%.
The pension sold 20,267 Wayfair shares to end the first quarter with 50,511 shares.
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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