US Massachusetts fund to sell stocks of Sudan-related firms
July 13, 2007 (BOSTON) — Massachusetts’ state pension fund, one of America’s biggest and most successful, plans to sell some $80 million in holdings of companies that invest in Sudan, becoming the latest investor to protest violence there.
“Money managers who invest for us and own stocks like Schlumberger (Ltd.) and PetroChina (Co. Ltd.) will be selling those holdings,” Michael Travaglini, executive director of the $50.3 billion Massachusetts’ Pension Reserves Investment Management Board (PRIM) fund, told Reuters. “In total we expect it will be about $80 million,” he said.
Exactly when the sales will occur is still unclear, however, and depends on Massachusetts lawmakers, who will soon vote on a bill ordering the divestment.
As the State Senate recently approved the bill unanimously and Gov. Deval Patrick endorses it, it should sail through the House without any trouble in the next weeks, said David Guarino, spokesman for House speaker Sal DiMasi.
At that point, Massachusetts would join investors like Harvard University and nearly 20 states including California, New York, and Texas, who have all pulled money out of stocks to protest mass killings in Sudan’s southern Darfur region.
Last month, Massachusetts’ neighbor Connecticut’s State Treasurer Denise Nappier directed the state pension fund to divest its $11 million holdings in China Petroleum and Chemical Corp., or Sinopec.
An estimated 200,000 people have been killed and some 2.5 million have driven from their homes since 2003. The U.S. government has accused the Sudanese government of genocide, a charge that Sudan has denied.
Massachusetts will remove from its portfolio companies like French high-speed train and industrial power plant engineer Alstom, which has seen its share price surge 104 percent in the last 52 weeks, and Schlumberger, the world’s leading oilfield services company, shares of which rose 32 percent in the last year, Travaglini said.
Managers like The Boston Company, GMO and others who manage international and emerging stocks funds for PRIM, will also ditch Sinopec, Lundin Petroleum AB, Reliance Capital Ltd. and Reliance Industries Ltd., Travaglini said.
“All of those companies were producers,” Travaglini explained, noting they helped the pension fund, which gained 16.72 percent in 2006, return 8.5 percent in the first six months of 2007.
While the trend to exit Sudan among powerful investors is gaining traction, it also raises concerns because it restricts managers’ investment options, Travaglini said.
Prominent investor Warren Buffett has defended his decision to hold onto PetroChina shares, and Fidelity Investments has cut but not eliminated its stake in the company.
“We are here to make money and we are not charged with stopping genocide in Sudan,” Travaglini said. “What we are most concerned about is that this could give rise to a number of other divestment bills,” he added.
For example, earlier this year former Israeli Prime Minister Benjamin Netanyahu appealed to U.S. pension funds, including the Massachusetts fund, to pull out of companies doing business with Iran amid fears over possible development of nuclear weapons.
(Reuters)