Here’s a deeper look at how the LDS Church makes its billions

Besides betting big on Big Tech, Ensign Peak Advisors scoops up other blue chip stocks and invests in consumer goods, health care, banking and business services.

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Ensign Peak Advisors, The Church of Jesus Christ of Latter-day Saints’ multibillion-dollar investment fund, has gone from operating nearly incognito 19 months ago to facing an uncomfortably hot spotlight.

Despite being among the world’s largest investment funds, the Salt Lake City firm functioned largely unseen until late 2019, when a former top manager-turned-whistleblower claimed it had amassed up to $100 billion, allegedly without its senior leaders telling much of anyone.

That touched off waves of new scrutiny for a global church used to keeping the slimmest of financial profiles. Ensign Peak has since made what amounts to a stunning series of quarterly reports to federal authorities on the portion of the Utah-based faith’s overall holdings it manages, not least for the portfolio’s sheer size.

It totaled nearly $50 billion as of June after gaining $3 billion in three months and adding nearly $12 billion since its first filing in early 2020 — just before the U.S. onset of the coronavirus pandemic. Alongside that stream of new financial information, a few other cracks in the walls of secrecy around Ensign Peak are being widened in federal court.

Though not named as parties, Ensign Peak Advisors and the words and actions of its senior managers were at the center of a high-profile lawsuit filed last March in U.S. District Court in California. It accused church leaders of fraud over their handling of billions of dollars in members’ tithing.

That case, brought by prominent former Utahn James Huntsman, sought at least $5 million in donations, interest and penalties, alleging the faith’s top authorities fraudulently misled members about spending donations meant for spiritual endeavors on commercial projects instead. A federal judge recently tossed out the lawsuit, but Huntsman’s lawyers plan to appeal.

The church contended no actual tithing was ever used and instead came from Ensign Peak’s earnings.

“The financial records destroy Huntsman’s fraud claim,” its lawyers argued in Aug. 31 court filings.

In several rounds of clashing court motions, the closely watched dispute led church attorneys to reveal innermost business details to a federal judge on some of Ensign Peak’s biggest transactions — including how it helped fund the City Creek Center mall in downtown Salt Lake City.

Here is some of what all these documents have brought into focus:

Heavy on tech

(Trent Nelson | The Salt Lake Tribune) The Church of Jesus Christ of Latter-day Saints' Administration Building in Salt Lake City on Thursday, Aug. 26, 2021. Court documents and Security and Exchange Commission filings shed additional light on how the church invests its money.

Ensign Peak is a huge investor in iconic technology stocks.

According to its first 2020 report to the U.S. Securities and Exchange Commission, filed months after allegations by whistleblower David Nielsen and his twin brother, Lars, made headlines, Ensign Peak’s value was reported at $37.8 billion in stocks and mutual funds. About $3 billion of that came from combined shares of Apple and Microsoft, accounting for 7% of the fund’s total value.

As of June, the fund’s shares in five Big Tech companies — Apple, Microsoft, Google, Amazon and Facebook — were worth nearly $9 billion, or 18% of its total value.

A closer analysis of Ensign Peak’s latest disclosures show that beyond big name stocks, technology in a variety of forms accounts for up to 27% of all its shares — worth nearly $13.3 billion.

As of mid-2021, it reported more than $2 billion each in companies specializing in software; internet services; semiconductors; other computer hardware; and biotechnologies behind new drug treatments.

Broader bets

(Christopher Cherrington | The Salt Lake Tribune)

Reports reveal the big stakes in tech are part of a vast hands-on market strategy by Ensign Peak, with upward of 1,850 different stocks at times, spread across virtually every part of the U.S. economy and abroad.

There are few clues as to how directly involved church leaders are in Ensign Peak’s moves, although officials over the fund have said they eschew debt in keeping with the faith’s tenets and steer clear of investments Latter-day Saints consider objectionable, such as tobacco or gambling stocks.

Beyond tech, Ensign Peak’s top holdings read like a typical blue chip roster: J.P. Morgan, Merck, Berkshire Hathaway and Intel. The fund holds immense stakes of $400 million or more in household stocks like Home Depot, Disney and Johnson & Johnson while at times making lucrative quick trades in “meme stocks” such as GameStop and Tesla.

A Salt Lake Tribune analysis shows the next highest concentrations of its investments beyond tech are in consumer goods, health care and financial sectors, each at stakes of between 12% to 15% of Ensign Peak’s total value, for shares worth a total of $8.6 billion, $6.9 billion and $6.6 billion, respectively.

The portfolio has large positions in banking, business services and several hefty hedge funds. It has shifted since mid-2020 into stocks in basic industries and capital goods that might expect to take off in an economic recovery. Ensign Peak also has at least $1.3 billion in shares of oil and gas companies, even after dumping 44% of its stock in Exxon Mobil early in 2020.

The ups and downs of lesser-known stocks in its portfolio show just how closely managed Ensign Peak’s holdings are.

It had a $1.5 million stake in sports apparel maker Lululemon in early spring of 2019, but managers had drawn that down to $2,000 by the start of 2021. The stake bounced up again to $102,000 in June.

Ensign Peak held $349,000 in shares in Beyond Meat, maker of plant-based meat substitutes, at the end of 2019, but that was down to $5,000 in June, making it the smallest holding in the portfolio.

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The fund relies on a healthy share of so-called real estate investment trusts (REIT), which package landholdings into shares for sale. The fund held $885 million in REIT shares as of June, along with another $750 million in index funds, whose gains and losses are wired to overall market trends.

It reported owning $27.8 million in shares in an index fund focused on companies in South Korea in late 2019, a stake that rose to $30.4 million by the end of last year. Shortly afterward, Ensign Peak sold it all, judging from its absence in recent reports.

In the same late 2020 window, Ensign Peak bought shares in index funds targeting Saudi Arabia and India, to the tune of $3.3 million and $12.6 million, respectively. It has significantly upped those holdings since. Ensign Peak reported in June it held $18 million in the Saudi fund and $58 million in the India one.

Beyond question, Ensign Peak Advisors has the potential to earn big money on the church’s behalf. Bouncing back since early 2020, Ensign Peak has posted quarterly gains of between $2.4 billion and $6.9 billion.

Tithing or earnings?

(Illustration by Christopher Cherrington | The Salt Lake Tribune)

Court documents submitted in California by the church’s attorneys say the fund has been around since 1997, seeded initially by excess tithing funds to create a “rainy day” account. Church officials have said the reserves are intended to help pay for operations in poorer parts of the world and to see the 16.6 million-member faith through any economic downturns.

Before that, the reserves were managed by the church’s Investment Securities Department, a top church financial official disclosed. By 2003, Ensign Peak’s assets had grown, according to court documents, though the church isn’t publicly saying by how much.

David Nielsen, the former Ensign Peak fund manager, said the tithing-fueled fund held at least $100 billion during his nine-year tenure there ending in 2019. Court documents in the Huntsman lawsuit have called it “a hedge fund which holds in excess of $128 billion.”

According to several rounds of clashing court motions, the legal dispute between Huntsman and the church hinges on whether up to $2 billion transferred from Ensign Peak and ultimately used for the City Creek Center mall and an ailing insurance firm were drawn from sacred donations — or, as church leaders maintain, investment earnings generated from that initial giving.

The church doesn’t dispute that payments made to City Creek came from Ensign Peak. But its lawyers go to great lengths in challenging Huntsman’s lawsuit — including filing rare financial documents under seal and blocking information from public view on others — to show that no actual tithing went into those transactions.

In 2003, the lawyers assert, the church earmarked money for City Creek from Ensign Peak’s investment gains. That was in keeping, they said, with then-church President Gordon B. Hinckley’s declaration that the faith had “a compelling responsibility to protect the environment of the Salt Lake Temple” and that it was “imperative to do something to revitalize this area.”

Firing back

(The Salt Lake Tribune) President Gordon B. Hinckley assured Latter-day Saints during General Conference in 2003 that no tithing money went toward the City Creek Center mall.

Huntsman countered that tithing funds — and earnings from those member donations — were commingled at Ensign Peak. To support that, he offered a freshly sworn statement by David Nielsen in which the whistleblower says that for officials at Ensign Peak “every penny was referred to as the ‘widow’s mite’” — a biblical allusion to its sacred nature.

Nielsen referred to a March 2013 meeting with the firm’s then-president, Roger Clarke, in which he heard Clarke outline $1.4 billion in spending on City Creek over five years and a one-time payment of $600 million to Beneficial Life, a struggling church-owned insurance company.

Based on Clarke’s statements, Nielsen said, “it appeared the church’s public statements were intended to conceal the truth about EPA’s use of tithing” for both commercial ventures.

The church responded that Nielsen’s assertions amounted to hearsay and supplied its own sworn statement from Clarke, who was president and managing director over Ensign Peak from its 1997 founding until he retired in May 2020. In it, Clarke affirms the veracity of all business records submitted on Ensign Peak’s role in the case, including its payments to City Creek Reserve.

Editor’s note James Huntsman is a brother of Paul Huntsman, chairman of the nonprofit Salt Lake Tribune’s board of directors.