California’s so-called gig-economy law was signed by Gov. Gavin Newsom in September.
The upshot to the law, which went into effect on Jan. 1, is that it would classify workers such as
(ticker: UBER) and
(LYFT) drivers as employees eligible for benefits including sick days and paid time off. Those two companies claim their drivers are independent contractors excluded from such benefits.
The California law was one more overhang for both Uber and Lyft stock, and both ended 2019 in the red from the prices set at their 2019 initial public offerings. Uber stock ended the year at $29.74, down 34% from its $45 May IPO price. Lyft stock crumbed 40% to $43.02 from its March IPO price of $72.
The largest U.S. public pension, California Public Employees’ Retirement System, literally had a front-row seat to issues around the gig-economy legislation. Of its 13-member board, two are appointed by the governor and four are members of the state government.
Yet Calpers, as the pension is known, chose to dramatically increase its investments in both Uber and Lyft stock in the fourth quarter, as the clock was ticking down for the companies to come into compliance with the new law. The pension also bought up
Alibaba Group Holding
stock (BYND) in the quarter. Calpers disclosed the trades, among others, in a form it filed with the Securities and Exchange Commission.
Calpers, which manages $372.6 billion in assets, declined to comment on the trades.
The pension increased investments in both Uber and Lyft by nearly sixfold in the fourth quarter. Calpers bought 1.63 million more Uber shares, lifting its holdings to 1.96 million shares at the end of 2019. It bulked up the Lyft investment by 275,521 shares to 336,500 shares.
Both stocks surged in the first month of 2020. Uber stock is up 22.0% through Friday’s close, while Lyft stock has tacked on 10.4%, compared with the relatively sedate
which is flat. Uber has allowed California drivers to set their own fares to bolster its case that drivers aren’t employees. Lyft hasn’t made the same change, but the two rivals are allies in opposing the reclassification of drivers as company employees.
American depositary receipts of Alibaba surged 54.7% in 2019, and the Chinese e-commerce giant had a strong showing with a listing in Hong Kong. We noted in December that at least one analyst saw a double-digit rise for Alibaba ADRs in 2020 as the company leverages its technology to an increasingly digital economy in China. For now, though, Alibaba ADRs are down 2.6% this year, as a deadly coronavirus outbreak has shut down entire cities in China.
Calpers bought 1.3 million more Alibaba ADRs in the fourth quarter, ending 2019 with 4.1 million.
The pension also loaded up on Beyond Meat stock in the quarter, multiplying its stake five times to 108,444 shares. The maker of plant-based burgers and more has seen shares rally 46.1% this year. Momentum from an expanded Canadian trial by
(MCD) has provided some lift. Beyond Meat stock tripled in 2019 from an IPO price of $25.
One analyst thinks there isn’t much upside left in Beyond Meat stock. But just this week, the company announced that
(DENN) would be serving Beyond Meat burgers in 1,700 outlets in the U.S. and Canada.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.