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CalPERS Releases California "Investment" Report

On Monday, CalPERS released its annual CalPERS for California 2012 report.  The report provides some interesting data about the size and nature of CalPERS investments.  According to the report, CalPERS invests in 664 public companies headquartered in California.  The market value of CalPERS' total investment is $9.1 billion which seems to be a big number until it is compared with the total market value of its public company investments, $112.7 billion.  Thus, over 91% of CalPERS' public company investments are not headquartered here.

Reading the report, one gets the very clear impression that CalPERS' investments are putting dollars directly in the bank accounts of California companies.  However, CalPERS doesn't say how much of these dollars are invested directly as opposed to acquiring shares in the secondary market (where the purchase price of is paid to existing shareholders).

CalPERS also appears to want to take credit for job creation at the companies in which it invests.  Its press release includes this claim:  "Nearly 1.5 million jobs have been supported or created as a result of CalPERS investments in California."  But what does it mean to "support" a job?  Do you support a jobs at an issuer when you buy its shares on the stock exchange?  How?  Moreover, the number of jobs that CalPERS claims to have supported or created is only a crude guess.  In a footnote, CalPERS explains its methodology as follows for determining the number of public company jobs as follows: "The number of jobs in California is estimated using the percentage of total company facilities in California.  Given that 20 percent of sample facilities are in California, and assuming that employment is spread evenly by facility, 1,002,000=total jobs at California-headquartered companies x 20 percent."

Remarkably, CalPERS even implies that it supports corporate philanthropy.  In "case study", it asserts "CalPERS invests $5 billion in the top 10 corporate cash donors of 2011, as identified in the annual Chronicle of Philanthropy Corporate Giving Survey"  [footnote omitted].  The message seems to be "buy a share, become a philanthropist".

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30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
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