State Teachers Retirement System of Ohio, which has been digging itself out of a hole in terms of funding, made some big changes in its stock investments last quarter.

According to its latest annual report, for the fiscal year ended June 30, 2018, STRS Ohio was 75.5% funded relative to its total accrued liabilities. That’s up from 75.1% a year before. The pension is still about 25 cents short for every dollar it owes, but its investments in domestic equities shone.

STRS Ohio, which covers public-school teachers and administrators, achieved a return of 16.21% for the fiscal year on the $22.7 billion of U.S.-traded equities it managed as of June 30, 2018, That compares favorably with returns on both the benchmark Russell 3000 and the S&P 500, which came in at 14.78% and 14.4%, respectively.

The stock portfolio accounted for 28.4% of the pension’s $79.9 billion in total assets.

STRS Ohio has continued to actively manage its investments in domestic equities. In the quarter ended June 30 this year, STRS Ohio slashed its investment in General Electric stock (ticker: GE) by nearly a quarter. It also took a position in the ride-sharing company Uber Technologies (UBER), sold Boeing stock (BA), and bulked up on shares of rail giant Union Pacific (UNP), among other trades.


The pension disclosed the trades in a form it filed with the Securities and Exchange Commission. STRS Ohio didn’t respond to a request for comment on the moves.

GE stock may be one of the most unlikely market outperformers this year. Shares lost more than half their market value in 2018. The embattled conglomerate weathered the indignity of being booted from the Dow Jones Industrial Average, and named its second new CEO in as many years.

GE has surged in the new year. Through Tuesday’s close, shares had rocketed 44.6% year to date, more than double the S&P 500’s 20.2% rise.

STRS Ohio sold 1.94 million GE shares during the second quarter, however, ending June with 6.44 million shares. GE stock has underperformed the S&P 500 so far in the third quarter, remaining flat compared with the index’s 2.4% rise.

Tap to View

STRS Ohio also began investing in Uber in the quarter; it owned 81,794 shares by the end of the period. Uber’s May initial public offering got off to a rough start, and the stock remains below its $45 IPO price, closing at $42.59 on Tuesday.


Uber has been fading this summer. So far in July alone, the shares have slipped 8.2%.

Boeing stock has eked out a 7.7% gain year to date. That is surprising considering the negative headlines the company has picked up in connection with the 737 MAX jet, which was grounded worldwide in March following the second crash of the plane in a matter of months.

Shares of the aerospace and defense giant have slumped 4.5% in July, hammered by news that Boeing was taking a $5 billion charge to compensate buyers of delays in deliveries of the 737 MAX. STRS Ohio sold 91,978 Boeing shares in the quarter, cutting its investment to 444,566 shares.

The pension bulked up on Union Pacific stock, buying 167,699 shares to end the quarter with 800,798 shares. The shares have surged 29.7% so far this year, including a 6.0% rise in July on strong earnings.


It isn’t a surprise that Union Pacific stock is outperforming the S&P 500. Barron’s has noted that railroad stocks have returned about 22% a year on average over the past decade, exceeding the 16% average annual return of the S&P 500 over the same span.

Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.