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Robert Trigaux

Florida public pension fund takes 3rd biggest hit nationwide from decline in BP holdings



Ashwilliamsbycolinhackleyspecialtotimes Wake up and good morning. The longer we examine BP and its devastating gulf oil spill, the more we realize the many ways the company is damaging the Florida economy. Next up: Public pension funds, like Florida's, that hold big stakes in BP and are taking big hits in value. (Photo: Ash Williams, executive director of the Florida State Board of Administration and chief investment officer, by Colin Hackley.)

Another pension fund, New York's Common Retirement Fund, owned more than 19 million shares when the Deepwater Horizon rig exploded in the Gulf of Mexico in April, and has a history of serving as the lead plaintiff in shareholder lawsuits. The trustee of the $132.6 billion state pension fund has hired law firm Cohen Milstein Sellers & Toll (details here) to represent the fund, saying, "BP misled investors about its safety procedures and its ability to respond to events like the ongoing oil spill and we're going to hold it accountable."

Florida's pension fund is watching these events. Dennis MacKee, spokesman for the $104 billion Florida state pension system -- one the largest in the United States -- told the Reuters news service: "We're monitoring the lawsuit and all developments but we have not come to any decision." 

As of June 11, the Florida pension system that covers nearly 1 million retirees and active workers had unrealized losses of about $65 million on its BP investments and $21 million of realized losses since the April 20 oil-rig disaster, according to MacKee. Here's the Reuters story

The BP hit comes at the same time that Ash Williams, who administers Florida's public pension fund, wants to raise the level of investing risk in search of higher returns. He's recommending reducing the pension fund's holdings in publicly traded stocks and bonds and tripling its allocation in hedge funds and other private investments that are less liquid and harder to value. More here from the St. Petersburg Times on this plan.

Nationwide, the damage to public pension funds from BP holdings is hefty so far. The California Public Employees’ Retirement System lost the most of all -- $284.6 million in value -- as the largest oil spill in U.S. history erased more than $1.4 billion from BP shares held by 42 state retirement accounts, data compiled by Bloomberg show. The declines come as public pension funds are struggling to recover from losses in the fiscal year ended June 30, 2009, when the median public pension investment return was minus 17 percent, according to Wilshire Associates.

Among public retirement funds with large holdings of BP, the California State Teachers’ Retirement System, known as Calstrs, ranked second in value lost, at $104.8 million, followed by Florida at $87.8 million and the Texas Teachers Retirement System at $84.5 million. Here's the full Bloomberg story.

-- Robert Trigaux, Times Business Columnist

[Last modified: Wednesday, July 28, 2010 11:00am]


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