The Church of Jesus Christ of Latter-day Saints’ largest investment fund plunged by 21% in the first quarter of 2020 as stock managers reallocated the multibillion-dollar portfolio amid the slumping coronavirus economy.
By comparison, the Dow Jones Industrial Average declined about 23% over the same time period.
Ensign Peak Advisors, the investment arm of the Salt Lake City-based faith, reported to federal regulators that the value of its stock holdings fell by $8.1 billion, to $29.7 billion, during that three-month span.
This stock account appears to represent a large chunk of the total value of Ensign Peak Advisors, which whistleblowing brothers Lars and David Nielsen said last year in a headline-making complaint to the IRS controlled assets worth at least $100 billion.
Ensign Peak Advisors’ drop in value wasn’t all from market losses. A review of Ensign Peak Advisors’ latest filings with the U.S. Securities and Exchange Commission shows it sold assets, too.
As of the end of March, the investment firm — whose capital comes from excess tithes paid by church members — owned stocks in 1,622 companies or funds. That’s 37 fewer than in the previous quarter. The total number of shares decreased by 7.75%.
While there were big sell-offs in the financial, energy and industrials sectors, Ensign Peak Advisors snatched up stock in some technology and health care companies.
The fund quadrupled its investment, for instance, in Zoom Video Communications Inc., which makes a web-based videoconferencing tool that has soared in popularity as people work from home and are isolated from loved ones. Ensign Peak Advisors owned $40 million worth of stock in the company at the end of the quarter.
The church’s investment arm also bought 7,400 shares in the meal delivery service Grubhub Inc., the SEC filing shows, though the value of that stock declined over the quarter.
In the health care sector, the fund acquired 16,000 shares in a company called 10x Genomics, which manufactures tests being used to determine who has or has had COVID-19. Ensign Peak Advisors also nearly doubled the number of shares it owns in the health insurance provider Humana.
Between the last quarter of 2019 and the first quarter of this year, the church’s investment firm sold 44% of its stock in Exxon Mobil. Energy companies have taken a pounding since the coronavirus cratered the price of oil worldwide and forced millions of people to stay home or took away their jobs so they didn’t need to keep filling their cars with gas for a commute.
Ensign Peak Advisors sold a quarter of its shares in the hotel giant Marriott International — founded by a prominent Latter-day Saint family — while boosting its stake by 13% in Marriott Vacations Worldwide, which focuses on vacation timeshares.
Zions Bank can trace its roots to a bank founded in 1873 by early Mormon leader Brigham Young. The church sold its majority stake in Zions in 1960, and Ensign Peak jettisoned nearly half its remaining stock in the past quarter.
The investment firm also sold 41% of its Caterpillar holdings and 13% of its stock in Deere & Co., the maker of John Deere tractors and construction equipment.
“The first observation is they moved to something called ‘stay-at-home stocks,’” said Haran Segram, a clinical assistant professor of finance at New York University’s Stern School of Business.
Segram, who teaches a course in the valuation of stocks, defines that term as companies consumers will keep using or use more often while social isolating. He said Ensign Peak Advisors also seems to be making those new investments in companies with good cash flows and prospects to increase those flows.
Segram said the quarterly filing demonstrates the sophistication of Ensign Peak Advisors’ financial analysis.
“This is not throwing a dart in the dark,” Segram said of the portfolio shifts. “This is based on solid fundamentals.”
A church spokesman declined to comment on the SEC filing or where any cash generated by the sales went. Segram said many institutional investors would hold onto the cash to reinvest when certain sectors begin performing better.
The SEC requires “institutional investment managers” with assets of at least $100 million to send quarterly reports on its holdings. Ensign Peak Advisors has met that asset threshold for years, yet it did not submit its first such filing until February of this year — after the Nielsens’ complaint. The latest quarterly report was made available May 11.
Church leaders have described the Ensign Peak Advisors investment reserves as a “rainy day account” to help fund operations across the globe.
The faith’s humanitarian arm, Latter-day Saint Charities, has been aiding coronavirus relief efforts, launching 280 projects in 80 countries. Besides donating medical supplies and vast volumes of food and hygiene equipment — including sending 15 semitrailer loads of commodities to food banks and other charities in the U.S. every week — it recently gave $5.5 million in cash to five aid agencies.
The church has not said how much, if any, of the reserves have been spent on these humanitarian initiatives.