The California Public Employeees’ Retirement System (CalPERS), the nation’s largest pension fund, in last year’s fourth quarter boosted its stake in San Diego-based Bridgeport Education by 112.4 percent, according to the company’s most recent filing with the Securities and Exchange Commission. CalPERS, which has $360 billion in assets, bought 133,159 Bridgepoint shares during the period, ending the quarter with 251,265 shares, or 0.86 percent of Bridgepoint stock. Institutional investors own 85.18 percent of the stock.
Bridgepoint is under investigation of several states and the federal government. It was studied by a United States Senate committee. One of the senators called it “an absolute scam.” The stock has been quite volatile.This raises the point of whether a pension fund — deeply underfunded — should chase after a volatile stock whose ethical problems have been well publicized. The stock has been over $30 and is now trading above $6.
CalPERS, which provides benefits for 1.6 million California public employees, retirees, and their families, is underfunded by $150 billion, with current assets at 68 percent of funds necessary to provide for its liabilities.
Pension funds have been under pressure to dump stocks of gun makers and retailers. CalSTRS, the state fund for teachers, sold off shares of gun makers after the Sandy Hook Elementary School disaster in 2013. “Over the decades, CalSTRS has divested from other industries — including tobacco and coal,” says nor.org. However, CalPERS has stuck to the position that its mission is to “Strengthen the long-term sustainability of the pension fund.” (On the other hand, another principle is to “Cultivate a risk-intelligent organization.”) I have been unable to reach the spokesperson for the fund.