Laura Ecklar: Error in BP stock chart (in the newspaper) makes it difficult to interpret

John Curry, July 7, 2010: "According to Laura [and to lessen the loss perception] ......."
Laura Ecklar to Molly Janczyk, July 7, 2010
Subject: Information Regarding BP Holdings

Yesterday, you included me on an e-mail discussing STRS Ohio’s BP holdings. Earlier today, I shared some information with another one of our members about this same topic. I am including that information below, as you may find it helpful. Thank you.

I am responding to your recent e-mail about the decline in the value of STRS Ohio’s holdings in BP stock. In your e-mail you referred to a chart that appeared in the Dayton Daily News. Unfortunately, due to an error in the chart, it is difficult to interpret.

As you look at the two columns labeled “BP shares April 19” and “BP shares June 28,” you will see the number of shares each system held at each of these points in time. However, when constructing the chart, the Dayton Daily News mistakenly inserted dollar signs on these columns. So, for example, on April 19, STRS Ohio held 14.6 million shares, not 14.6 million dollars in stock, while OPERS held 7.4 million shares and not 7.4 million dollars of stock. Then, on June 28, STRS Ohio held 10.1 million shares versus 9.39 million shares held by OPERS. In short, OPERS bought shares during this period; STRS Ohio has been a net seller.

On the chart, it is also difficult to see the footnote, which explains that the loss in value shown in the third column reflects both fewer shares and the drop in the share price for OP&F and STRS Ohio, who were both net sellers during this period. So, even if the price of the shares had not changed, STRS Ohio would show a decline in value because we have 4.5 million less shares on June 28 than we held on April 19. Conversely, the loss in value shown for three other entities listed on the chart (OPERS, SERS and Highway Patrol Retirement System) is tempered by the fact that they have increased their holdings since the oil spill. We appreciate that the chart was confusing; I hope this information provides some clarification.

You also asked what percentage of the entire portfolio did the BP investment represent. The market value of STRS Ohio’s BP stock holdings on June 28 represents approximately 0.08% of the market value of the total investment fund.

If I may, I’d like to note one additional item. You will undoubtedly read different numbers regarding the Ohio pension systems’ holdings and market values in various news outlets and other reports. This is because they often ask for different time periods. For example, a report being submitted to the ORSC by the five systems will cover the period from March 31, 2010, through June 30, 2010. During that period, the decline in market value for STRS Ohio BP stock holdings is approximately $64.3 million — again reflecting both less shares and the decline in share price.

I hope this information is useful to you. Thank you.

Laura Ecklar
Director, Communication Services
Click image (twice) to enlarge.

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