It’s easy to be tempted into a sense of schadenfreude with some titans cut down to size in the recent tech stock meltdown.
But remember that their pain is yours
pain too.
Many of our KiwiSaver funds rode the tech stock boom. And, more broadly, we are all exposed through the NZ Super Fund’s multibillion-dollar holdings in various US tech giants, from its US$1.56 billion stake in Apple to its US$1.24b holding in Microsoft to its large stakes in the likes of Meta , Amazon, Alphabet and Tesla (more on that below) have seen tech stocks dominate the fund’s top 10 global equity holdings and feature as some of its biggest investments completely.
Meta founder Mark Zuckerberg took a US$100b hit to his fortune this year as his company’s shares fell from US$336.35 to US$97.94.
Just yesterday, his firm (owner of Facebook, Instagram, WhatsApp and The Metaverse) lost 24.6 percent of its value, giving his personal fortune another hit (Zuckerberg has a 13 percent stake in Meta ). Zuckerberg’s fortune fell by US$11b in Thursday’s session (US time). He is now down to his last US$36b.
Meta has struggled to deal with Apple’s privacy push, which has weakened Facebook and Instagram’s ad revenue tied to user tracking, a slowdown in overall ad spending, TikTok stealing its lunch with young people, and lack of of user interest in its virtual reality efforts – which lost $3.7 b for the September quarter, with heavier loss forecasts.
That’s important to us because at the last disclosure of its global equities – for its holdings as of December 31, 2021 – the Super Fund had shares in Meta worth $417 million.
Here’s how the fund’s top 10 equities looked in its final disclosure statement, at the end of last year:
NZ Super Fund 10 largest shareholdings, Dec 31
holding: NZD value as of Dec 31, 2021
1. Apple: $1.56 billion
2. Microsoft: $1.24b
3. Alphabet: $939 million
4. Amazon: $734m
5. Tesla: $419m
6. Meta: $417m
7. F&P Health Care: $405m
8. Nvidia: $349m
9. Johnson and Johnson: $308m
10. JP Morgan Chase: $241m
The fund won’t give a full update until it releases its annual report next week.
But it did give the Herald the value of its biggest tech holdings as of September 30 (the close of its reporting period; the fund had already disclosed that its value fell by $3.3b to $55.7b in the year to June 30 amid collapse of world markets ).
• Apple: $1.18b
• Microsoft: $854m
• Alphabet: $548m
• Amazon: $438m
• Tesla: $348m
• Johnson & Johnson: $278m
• F&P Health Care: $254m
• JPMorgan Chase: $166m
• Meta: $159m
• Nvidia: $134m
Tech stocks staged a modest recovery in the weeks after Sept. 30, but faltered this week on weaker-than-expected earnings. (Apple is a rare exception as it reported record revenue and profit growth.
If its global equities portfolio hadn’t offloaded (or added) any Meta shares, the value of its holdings in the Facebook parent would have dropped to $122m after yesterday’s bloodbath.
The only NZX holding in the top 10 Super Fund – Fisher & Paykel Healthcare – is also in the wars (or should we say out of the wars, as Covid recedes, reducing the need for respirators of this). Shares fell from $32.76 on Dec. 31 to a recent $19.25.
And our exposure is wider than that top 10. The Super Fund’s December 31 disclosure also included smaller stakes in several battered techs including Cisco ($190m), chip maker Broadcom ($144m) and Texas Instruments ($143m), Adobe ($127m), Oracle ( $115m), Netflix ($112m), Intel ($106m), Salesforce ($104m), smartphone chipmaker Qualcomm ($104m), Samsung ($78m), AMD ($68m), HP ($62m), ServiceNow ( $50m), Nintendo ($31m), Autodesk ($24m), Palo Alto Networks ($22m), eBay ($20m), Uber ($20m) and Twitter ($14m).
The Super Fund’s stake in Pfizer has also withered. The vaccine maker’s shares were at US$59.05 when the fund reported the value of its holdings at US$231m. The stock recently traded at US$45.74.
Outside its top 10, the Super Fund is topped by major tech holdings Spark (in which its stake was worth $211m as at December 31), Vodafone NZ and Canberra Data Centers co-owner Infratil ($137m) and Chorus ($58m) – even its smaller software holdings Pushpay ($35m), Serko ($13m) and Vista Group ($18m) struggled.
Some tech stocks face broader issues than the global slowdown.
For example. It’s hard to gauge how Meta will be able to stem the TikTok tide as it tries to convince people to buy its new $2699.99 Quest Pro VR headset – and all some commentators are now calling for is a change at the top, which will be confusing (the Super Fund banded with other institutional investors to push for more transparency and other government reforms.Although the move was fueled by those seeking a stronger response to hate speech and disinformation after the Christchurch massacres mosque, it was always going to be difficult because of the firm’s “super voting” tier that allows CEO and chairman Zuckerberg to exercise majority control despite owning a minority of the stock. The Super Fund threw in the towel in October last year).
Tesla will have to navigate a world where nearly every single carmaker is moving to all-EV production and a related supply crunch in some materials needed for car batteries.
And this is not how Nvidia can regain its dizzying heights. The once relatively unknown maker of graphics processing chips has seen its market cap rocket from US$81b in 2018 to US$735b in 2021 – making it one of the 20 most valuable companies in the world – as its technology has become popular for bitcoin mining. With the crypto crash this year, its market cap has more than halved. While crypto may be making a comeback, hugely power-intensive Nvidia-powered mining rigs are being replaced by a theoretical “proof of work” process, pioneered by Ethereum with others set to follow).
But, as a species, tech stocks are resilient. They have a history of coming back, as they did after the bursting of the dotcom bubble and the GFC.
So if it goes long – which is its modus operandi – the NZ Super Fund will see its tech holdings recover in value. That would be good news for all of us.
A spokeswoman for the Super Fund said responsibility for that decision had been delegated.
“The Fund’s global equity holdings are managed by a number of external investment managers. These managers have the discretion to make decisions about which stocks to hold on behalf of the Fund.”