New Jersey’s state pension exited investments in EV companies Nikola and Workhorse, and bought shares of data-analytics firms Palantir and Snowflake.
Courtesy of Nikola
New Jersey’s state pension recently made major changes in its U.S.-traded stock investments, shifting from one hot area of the market to another.
State of New Jersey Common Pension Fund D, the pension’s largest fund by assets, exited smaller investments in the embattled electric-vehicle companies Nikola (ticker: NKLA) and Workhorse Group (WKHS), and added to positions in data-analytics-software firms Palantir Technologies (PLNT) and Snowflake (SNOW) in the third quarter. The pension disclosed the stock trades, among others, 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, didn’t respond to a request for comment. Pension Fund D’s total assets stood at $50.5 billion as of June 30, 2020, while total assets for the pension were $80.4 billion, according to the latest annual audited financial statement.
New Jersey’s pension had owned 180,823 Nikola shares as of June 30, but sold them all by Sept. 30. Nikola stock tumbled 30% in the first nine months of 2021, but so far in the fourth quarter, shares of the maker of battery-electric and hydrogen-electric trucks have gained 23.1%. For comparison, the S&P 500 index rose 14.7% in the first nine months of 2021, while it is up 9.1% so far in the fourth quarter.
Last week, Nikola said it was in talks with the SEC to settle the agency’s investigation about allegations of false claims made by former CEO Trevor Milton. The Justice Department is also investigating the company over the same allegations. The expected penalty is $125 million to be paid over time, the company said, adding that it would seek “reimbursement from its founder, Trevor Milton, for costs and damages in connection with the government and regulatory investigations.”
Earlier this year, federal prosecutors charged Milton with making misleading and false statements to the company’s investors. Milton is no longer affiliated with Nikola, as the company has pointed out, but the charges stem from his alleged actions while he was the CEO. Nikola says it is cooperating with the government’s inquiry, while Milton has denied wrongdoing. The stock rallied last month on news of a lease reached for 100 vehicles.
The pension sold its entire investment of 65,033 Workhorse shares in the third quarter. Workhorse stock dove 63% in the first nine months of 2021, and so far in the fourth quarter shares of the developer of battery-electric trucks and aircraft have slipped 11.2%.
Workhorse had a rough September. Near the end of the month, it suspended production of its electric delivery vans, and recalled the ones it already built. Then at the end of September, Workhorse said both its chief financial officer and chief operating officer had left the company. B. Riley analyst Christopher Souther wrote in late October that Workhorse’s “deliveries will be quite minimal until our expected ramp” in the second half of 2022. CEO Rick Dauch‘s “assessment of the redesign and roadmap for the ramp will be more important for the stock given the long-time industry executive’s track record and credibility,” Souther added. Dauch, a longtime automotive executive, became Workhorse’s CEO effective Aug. 2. Souther rates Workhorse stock at Buy with a $14 price target.
Palantir stock edged up 2% in the first nine months of this year, and so far in the fourth quarter, shares have gained 8.2%. Shares rallied in early October when the company announced it had won an Army contract. Bears remained unimpressed. Earlier this year, Palantir disclosed that it had been buying up gold bars.
New Jersey’s pension tripled its investment in Palantir by buying 587,986 more shares to end September with 907,675 shares.
The pension bought 97,935 more shares of Snowflake to raise its investment to 113,882 shares. Snowflake stock rose 7.5% in the first nine months of 2021, and so far in the fourth quarter shares have gained 20.6%.
Snowflake’s fiscal second quarter, ended July, was strong, and guidance was upbeat. Some analysts think growth estimates are too low. The Street has been lifting price targets on Snowflake stock.
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 [email protected] and follow @BarronsEdLin.
