undefined | Better HN

0 pointsRhysU5h ago0 comments

> The New York and California pension systems would become holders of SpaceX shares through their passive allocations if the company is admitted to major U.S. stock indexes.

If they have discretion, these pensions can replicate the S&P500 minus SpaceX if they don't like SpaceX's governance.

If they're forced to passively hold precisely the S&P500 then shaddup and stop active managing.

Next.

0 comments

bell-cot5h ago

> If they have discretion...

True. But doing so would be a fair amount (by index standards) of overhead and hassle. Plus they'd get endless complaints any time the S&P500 was outperforming the "S&P 499" that they were using. Plus they'd put themselves in the crosshairs of a whole range of activists who wanted them to switch to an "S&P 498", or ...497, or ... - by excluding various other companies the activists didn't like.

> If they're forced to passively hold...

Their responsibility is managing their pension funds in the interests of their state, and their current & future retirees. Not pious adherence to passive indexing canon. Their calculus here might be to throw a small bone to the anti-Musk activists who are currently bothering them, while acquiring some "we tried!" butt-coverage for whenever Musk really goes off the rails. (And, obviously, trying to discourage other companies from using such control structures.)

rjmunro4h ago

I'd like to be able to invest in an "index minus certain companies which I choose" fund so that people can exclude companies that they don't like for whatever reason.

RhysUOP3h ago

You can. A bunch of companies offer SMAs like this. It's a retail product, usually labeled as some smart tax loss harvesting atop the indices where you can denylist particular stocks.

Fidelity offers one: https://www.fidelity.com/managed-accounts/separately-managed...

It'd probably take you an afternoon worth of time to research then enact it.

RhysUOP4h ago

> But doing so would be a fair amount (by index standards) of overhead and hassle.

Any product provider, like Blackrock, would jump at the opportunity to sell them an S&P499 given the scale of those pension funds.

> Plus they'd put themselves in the crosshairs of a whole range of activists...

Not to mention putting their own jobs on the line if SpaceX outperformed the rest of the index.

The first point, that an S&P499 is easy for them but they won't do it, means they have no conviction. The second point (where I agree with you), that it's obvious we-tried CYA lacking any real teeth that'll go nowhere, means they have no courage.

They're an asset manager: put your money where your mouth is. If their hypothesis is that SpaceX governance will be bad then short the bloody thing and use the proceeds to buy the S&P499. It's not a complicated trade given their industry position and ability to call third-party providers.

j / k navigate · click thread line to collapse