Tuesday, June 22, 2010

It's 11 p.m.--Do You Know Where Your Money Is?

retirement savings go up in smoke...

Many public pension funds have been singed by the shrinking market capitalization of British Petroleum in the wake of the ongoing oil spill in the Gulf of Mexico. Bloomberg reports that 42 state retirement systems have lost a collective $1.4 billion as BP's stock price finds its way to Davy Jones' Locker, right down there with the Deepwater rig. In fact, BP now stands for Busted Pension.

Inquiring minds would like to know if the Maine Public Employees Retirement System (MainePERS), with over 60% of its assets in stocks, is among those Blown-uP. Unfortunately, the MainePERS website lists only its top ten holdings, so it is not clear what exactly is the state's exposure to the Gulf catastrophe.

Largest Holdings as of March 31, 2010:

Market Value
Exxon Mobil 71,959,159
Microsoft 55,653,480
Apple 47,963,074
General Electric 47,801,681
Bank of America 45,629,830
JP Morgan Chase 45,215,848
IBM 44,158,655
Procter & Gamble 42,228,106
Johnson & Johnson 41,050,050
Cisco Systems 40,596,648
Top 10 Equities 482,256,533

Personally, I would be concerned about the bank holdings in this group. In a deflating economy these will get hammered. Over the past ten years MainePERS has achieved an annualized return of roughly 3%, which is probably insufficient to cover growing liabilities.

partial recovery only
[still down 17% from the 2007 peak]

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