The Retirement Systems of Alabama made some bold stock trades in the second quarter.
RSA, as the pension plan is known, slashed its investments in
stock (FDX), while adding to its position in
(WMT). Two of those trades are beating the market.
The plan, which includes the Teachers’ Retirement System of Alabama (TRS), the Employees’ Retirement System of Alabama (ERS), and the Judicial Retirement Fund (JRF), isn’t free of issues. As of Sept. 30, 2017, the date of RSA’s most recent actuarial valuation, its funding came up significantly short.
Assets amounted to 68.9% of liabilities for TRS, 67.8% for ERS, and 65.4% for JRF. But those levels have been steadily increasing since Sept. 30, 2012, when they stood at 66.5% for TRS, 65.7% for ERS, and 61.6% for JRF.
For the fiscal year ended Sept. 30, 2018, RSA managed total assets of about $43.8 billion. More than half of that was invested in domestic stocks, which returned 17.71%, 17.75%, and 17.27% for the TRS, ERS, and JRF, respectively. Those numbers are just shy of the
’s 17.9% return.
RSA didn’t respond to a request for comment on its stock trades.
Selling AT&T stock appears to have been a good move. RSA sold 1.1 million shares of the telecom and media giant in the second quarter, cutting its investment to 3.4 million shares. Since the end of June, AT&T stock has slipped 2.1%, compared with a 1.2% rise in the S&P 500.
RSA also nearly chopped its investment in GM stock in half in the second quarter. It sold 541,927 shares of the auto maker to end June with 615,146 shares. GM stock has gained 2.5% since the end of the second quarter, topping the S&P 500.
Barron’s has high regard for GM CEO Mary Barra, who has doubled earnings per share at the company.
FedEx stock has been outpacing the S&P 500 since the end of the second quarter, rising 1.8%. Still, the shares sport a year-to-date gain of only 3.6% compared with 18.7% for the index. The stock of the logistics firm has been hampered by disappointing earnings and downbeat financial forecasts this year.
Stock in Walmart has also outperformed the S&P 500 so far in the third quarter, rising 3.1% since the end of June. Walmart stock has surged 22.3% so far in 2019, setting a record intraday high of $115.49 this past Tuesday. The shares have more than erased 2018’s 5.6% drop.
We have noted that the Street is upbeat about the retailer’s strategy for online sales. RSA bulked up on Walmart stock in the second quarter, buying an additional 133,465 shares to end June with 1.2 million 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.