Teacher Retirement System of Texas trims BP holdings following oil spill

The Teacher Retirement System of Texas has shed nearly 3 million shares of stock in beleaguered British oil giant BP PLC since the Gulf of Mexico oil disaster began April 20, AustInnovation™ has learned.

At the beginning the current fiscal year (Sept. 1, 2009), the Teacher Retirement System owned 22.9 million shares of BP (NYSE: BP), according to a statement provided to AustInnovation™ by system spokesman Howard Goldman. Before the oil rig explosion and continuing oil spill, the system already had cut its holdings of BP stock by a net 5.2 million shares.

Since the Gulf disaster—deemed the worst oil spill in U.S. history—the retirement system has continued decreasing its net holdings of BP stock by another 2.9 million shares. Today, the system owns 14.8 million shares of BP stock.

BP’s shares have taken a nearly 50 percent dive since their April 20 close on the New York Stock Exchange.

As a result of the stock sell-off and the drop in the market price of BP shares, the retirement system has seen a net reduction in the market value of BP holdings of $39.7 million since Sept. 1, 2009, according to the statement.

To put things in perspective, the $39.7 million decline in the market value of the BP holdings is the equivalent to four one-hundredths of 1 percent of the system’s $96.7 billion pension fund. In other words, if the system’s entire fund was worth $1, the drop in market value for BP holdings would represent four one-hundredths of one penny.

The Teacher Retirement System is the largest public retirement system in Texas, in both membership and assets.

As of Aug. 31, 2009, stock in London-based BP ranked No. 3 among the retirement system’s top 10 international equity market holdings.

The statement says that the system’s fund, ranked No. 7 in assets among U.S. public pension funds, “remains highly diversified in its investments, and developments related to BP have had no material impact on the fund. Member pension benefits are not impacted by this event.”

The Teacher Retirement System of Texas delivers retirement and related benefits, and manages the trust fund set up to pay for member benefits. Nearly 1.3 million public education and higher education employees and retirees participate in the system.

From March 2009 to March 2010, the retirement system produced an investment gain of 35 percent, or $25 billion. The system’s chief investment officer, Britt Harris, reported those figures last week to the system’s trustees.

“The period just prior to the recent gains tested the resolve of the TRS investment team, our board and that of our members,” Harris says. “While the recent gains are very encouraging, we all know that this entire period has been exceptionally volatile and virtually unprecedented. While the fund has performed well, we still have much work to do.”