GROUP PROJECT- CASE STUDY| A report submitted in partial fulfillment of the course| | MODERN INVESTMENT & PORTFOLIO MANAGEMENT| INSTRUCTORS: PROF. S. K. BARUA PROF. J. R. VARMAACADEMIC ASSOCIATE: MS. VAISHALI SATTAREPORT PREPARED BYGROUP 12MEENAKSHI DEOGAM M. SHYAMNIMISHA SAXENARAGHAV YADAVROHAN ANANDDATE OF SUBMISSION: 24TH AUGUST, 2010| | Effect of BP oil spill and subsequent market reaction on the assets of pension funds and mutual funds
Case Facts:- * 20th April 2010 – an explosion caused by blowout on Deepwater Horizon rig kills 11 crewman (including 9 Transocean employees) and ignites a fireball visible from 35 miles. * Deepwater Horizon was leased to BP from March 2008 to September 2013 * Share price on 21st April 2010 – 648. 20p & lowest on 29th June 2010 – 302. 9p – price on 19th August 2010 – 386. 7p – [http://www. google. com/finance? =LON%3ABP] * Pension Funds investing in BP – California Public Employees’ Retirement System, California State Teachers’ Retirement System(CalSTRS), Texas Fund, New Jersey Division of Investment, NY State Pension Fund * NY State’s Pension Fund – New York pension fund to sue BP for investment losses [http://www. reuters. com/article/idUSTRE65M3H420100623] * The California Public Employees’ Retirement System lost $284. million in value as the largest oil spill in U. S. history erased more than $1. 4 billion from BP Plc shares held by 42 state retirement accounts, data compiled by Bloomberg show………The declines come as public pension funds are struggling to recover from losses in the fiscal year ended June 30, 2009, when the median public pension investment return was minus 17 percent, according to Wilshire Associates of Santa Monica, California…….
CalPERS, the largest U. S. public pension at $210 billion, held 58. 2 million shares of BP on April 20 and saw the value fall to $301 million from $585. 7 million, according to Bloomberg data………. The Texas Fund – $96. 7 billion on FY ending 31st March, 2010 lost $39. 7 million in value– sold 8. 1 million shares of BP