Canada Pension Plan's Tech Investments Update

Overview

Canada Pension Plan, one of the largest public pensions globally, made significant moves in the tech sector during the fourth quarter of last year. The pension fund, managed by CPP Investments, opted to increase its stake in big-name technology stocks while venturing into a Chinese stock that had seen better days.

Apple and Microsoft

The pension fund doubled down on Apple, acquiring an additional 2.5 million shares, bringing its total investment in the tech giant to 4.5 million shares. This move came despite Apple's recent challenges, including disappointing revenue guidance and a shift in focus towards artificial intelligence software development. Despite these hurdles, Apple's stock price soared by 48% in 2023.

On the other hand, Canada Pension Plan also bolstered its position in Microsoft as the tech giant's stock climbed by 57% last year. This year, Microsoft's shares have continued to rise, outperforming Apple. In fact, Microsoft recently surpassed Apple to become one of the first publicly traded companies to reach a $3 trillion market cap.

Tesla and Alibaba

Apart from Apple and Microsoft, Canada Pension Plan initiated an investment in Alibaba Group Holding, a notable move considering the challenges faced by Chinese stocks in recent times.

Final Thoughts

While market conditions remain volatile, Canada Pension Plan's strategic tech investments showcase a calculated approach to diversifying its portfolio with key industry players. With their significant holdings in tech juggernauts like Apple and Microsoft, as well as the foray into Alibaba Group Holding, the pension fund appears poised to navigate the dynamic landscape of the global financial markets.

Pension Investments in Big Tech Stocks

The pension fund made significant moves in the tech sector in the fourth quarter of last year. Their investments included 1.4 million Microsoft shares and 147,090 Tesla shares which brought their total holdings to 3.5 million shares and 525,193 shares respectively.

Tesla's Market Position

Despite questions surrounding the future of Tesla's electric vehicle (EV) plans after Apple's announcement, the market response was muted. Tesla's stock remained stable amidst a sector-wide stagnation. Reports from The Wall Street Journal highlighted a slowdown in EV sales, with concerns rising as Tesla fell behind China's BYD in quarterly sales for the first time.

Stock Performance Update

In 2023, Tesla's stock saw an impressive 100% increase. However, in 2024, the shares have experienced an 18% decline. Similarly, Alibaba's American depositary receipts faced challenges, dropping by 12% last year and 3.7% in the current year.

Market Pressures on Tech Giants

The tech industry, including Alibaba, has been grappling with the effects of China's economic conditions. Ongoing deflation and concerns around the country's property sector have created a challenging environment for these companies. Even the festive period of Lunar New Year failed to uplift investor sentiment, with a focus on Alibaba's cloud division which announced price reductions in February.

Institutional Investment Strategy

In a strategic move, CPP Investments acquired 3.6 million Alibaba ADRs in the last quarter, a substantial shift from holding none in the previous quarter. This further showcases their confidence in the tech giant's future prospects.