LDS Church discloses the $37.8 billion stock portfolio of its biggest investment fund

(Christopher Cherrington | The Salt Lake Tribune) Ensign Peak Advisors, an investment arm of The Church of Jesus Christ of Latter-day Saints, detailed its stock holdings in a federal filing stamped Feb. 14, 2020.

For the first time, the LDS Church’s biggest investment fund has disclosed its Wall Street holdings, revealing $37.8 billion in stocks and mutual funds.

The federal filing may be the best answer ever to how The Church of Jesus Christ of Latter-day Saints has invested the excess tithing paid by its 16 million members. The detailed list included 1,659 stocks and mutual funds, including household names like Amazon, Chevron and Walmart, that the fund held for the quarter ending Dec. 31.

The investment fund, called Ensign Peak Advisors, quietly submitted the filing Feb. 14 to the U.S. Securities and Exchange Commission. The stock portfolio appears to represent a large portion of the total value of Ensign Peak, which whistleblowing brothers Lars and David Nielsen said in a complaint sent to the IRS controls assets worth at least $100 billion.

The SEC filing is standard for “institutional investment managers” with assets of at least $100 million.

Ensign Peak Advisors has met that threshold for years, yet the SEC website shows this is the first time the fund has submitted such a filing.

The LDS Church, through a spokesman, declined to answer questions about the recent filing or why it wasn’t submitted before.

“They may have previously read the rules to exempt advisers to religious institutions, and are now disclosing in light of the recent controversy,” said Jeff Schwartz, a University of Utah professor who focuses on corporate and securities law and reviewed the filing for The Salt Lake Tribune.

This filing doesn’t encompass all of the church’s financial holdings. Some assets are held in shell companies that file separately.

In 2018, The Truth and Transparency Foundation, the nonprofit newsroom behind the former MormonLeaks site with a stated mission to disclose information about religions, said it had found 13 such shell companies with assets of $32 billion.

Apple to Zions

Ensign Peak Advisors itself is far larger and more diversified than any of those smaller funds, the Feb. 14 filing shows. About $3 billion of the Ensign Peak Advisors stock holdings — or 7% of the value reported in the filing — was almost evenly split between Apple and Microsoft stock.

Two-thirds of Ensign Peak Advisors’ reported stock holdings came from 100 companies or mutual funds. Of those 100, the plurality of the investment — 26% — was in the technology sector.

The next two biggest sectors were health care, including Johnson & Johnson and Merck stocks; and financial services — stocks such as Bank of America and Berkshire Hathaway.

There also were investments in two Utah-based companies.

The fund reported owning $91.8 million of stock in Zions Bank. That bank can trace its history to a bank founded in 1873 by LDS Church President Brigham Young. The church sold its majority stake in Zions in 1960.

Ensign Peak Advisors also owned $76.7 million of stock in Pluralsight, an online education company based in Farmington.

While the LDS Church owns for-profit insurance and personal investment businesses as well as radio stations and Salt Lake City’s NBC affiliate, KSL-Channel 5, Ensign Peak Advisors invested in those businesses’ competitors. It owned stock in SiriusXM, the three companies that combine to own the local ABC, CBS and FOX affiliates, and in The New York Times Co.

The church counsels its members to not consume tobacco, alcohol or hot caffeinated drinks. And the portfolio reflects that. There were no cigarette or beer manufacturers, nor was there an investment in a coffee chain, such as Starbucks.

Of the 30 companies that comprise the Dow Jones Industrial Average, Coca-Cola is the only one Ensign Peak Advisors did not invest in. The fund didn’t own stock in soda makers PepsiCo or Keurig Dr Pepper, either.

Caffeinated sodas are not part of the church’s health code, known as the Word of Wisdom.

Part of the picture

The SEC filing discloses only Ensign Peak Advisors’ holdings in publicly traded companies or funds, and such filings do not include investments in real property or private companies.

How the LDS Church plays the stock market has been the subject of speculation for decades. After the church in 2018 expressed opposition to medical cannabis, for example, some online forums wondered if the reticence was influenced by church investments in pharmaceutical companies that sell opioids.

Roger Clarke, the head of Ensign Peak Advisors, told The Wall Street Journal last month that one reason for the shell companies was to make church investments harder to track so that parishioners with insufficient information didn’t mismanage their own portfolios by trying to mimic what Ensign Peak Advisors was doing. The Journal reported that the fund also owns Florida timberland and investments in big hedge funds.

D. Michael Quinn, a historian who has focused on LDS Church finances, said it’s no surprise the church invests in blue chips stocks. But the specifics offered in the SEC filing represent a milestone for an institution that has been famously secretive about its money.

“It’s great detail that we haven’t had before,” Quinn said, “but it’s only part of the picture.”

Quinn says Ensign Peak Advisors is just one of the church’s investment firms. There are other firms working on both the nonprofit and for-profit sides of the church that combine to handle even more money than the $100 billion Ensign Peak Advisors is said to be worth.

As to Clarke’s concern, Quinn suspects only journalists, academics and historians will be interested in studying the portfolio. He doubts rank-and-file Latter-day Saints will refer to the SEC document for investment advice.

“Members of the church don’t need to do extensive research to invest in blue chip stocks,” Quinn said.

Schwartz, the law professor, believes any penalty Ensign Peak Advisors might face for failing to file a quarterly report until now would be light by the standards of a multibillion-dollar fund. He found one case in which an investment firm failed to file the necessary reports for three years. The SEC issued a fine of $100,000.

“It doesn’t seem like there would be huge penalties,” Schwartz said.

If Ensign Peak continues issuing quarterly reports, the next one would be available on the SEC website in mid-May.

The Nielsen brothers’ complaint, first reported by The Washington Post, drew international attention to the church’s financial interests and shocked many outsiders and members of the faith. The brothers argued that the church was violating tax laws by not spending more of this reserve on charitable purposes.

The church’s governing First Presidency — made up of church President Russell M. Nelson and his counselors, Dallin H. Oaks and Henry B. Eyring — rejected that allegation in a news release, saying the faith “complies with all applicable law governing our donations, investments, taxes and reserves.”

(Francisco Kjolseth | The Salt Lake Tribune) President Russell M. Nelson, center, greets President M. Russell Ballard, acting president of the Quorum of the Twelve Apostles while followed by President Dallin H. Oaks, first counselor in the First Presidency and Henry B. Eyring, second counselor in the First Presidency for the start of the Sunday afternoon session of the 189th twice-annual General Conference of The Church of Jesus Christ of Latter-day Saints at the Conference Center in Salt Lake City on Sunday, Oct. 6, 2019.

Other Latter-day Saint officials later said they didn’t previously disclose how big the financial reserve had grown because they didn’t want to discourage members from tithing, which is donating 10% of one’s income to the faith.

The church collects that tithing, which it uses to run its operations around the world, and it sends the excess to Ensign Peak Advisors to invest.

Church officials have called the fund a “rainy-day account” to help pay for operations in poorer parts of the world — such as Africa, where the faith is booming — and at some future time when member donations stagnate.