Mario Iacone: Simple math on BP stock and questions for STRS management

Mario Iacone to John Curry, July 8, 2010
Subject: BP Holdings at STRS

John, all the numbers on BP are very confusing. Did some simple math on it. May clarify the situation.Mario

BP stock on April 19th represented a SIGNIFICANT PORTION OF STRS HOLDINGS

Approximately 1.6% of Total STRS Asset Value.

STRS BP HOLDINGS - April 19th

14.6 million shares @ approx $60 per share.

Value would be $876,000,000 or almost 0.9 Billion

Approx 1.6% of entire STRS asset value.

(Approx 1 Billion divided by 60 Billion equals 1.6%)

Current value of 14.6 million shares @ approx $30 per share would be approx half or .45 Billion

The loss is disturbing in light of proposed benefit changes.

However, what disturbs me the most is a lack of effective RISK MANAGEMENT to protect profits and limit losses.

If lack of effective Risk Management continues, I fear that we will continually be exposed to large losses which will continue to result in reduced benefits.

I do not criticize anyone for not anticipating the BP Oil Spill.

I do question why the loss was not limited to a much smaller amount.