Agency lost $ 1 billion on untimely investment by Royal Caribbean Cruises, filings say

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The Canada Pension Plan Investment Board appears to be suffering a billion dollar loss on its investment in Royal Caribbean Cruises Ltd. after the cruise lines collapsed in March after the COVID-19 outbreak .

Canada’s largest pension plan, with more than $ 420 billion in assets under management, must disclose its holdings of US stocks quarterly to the United States Securities and Exchange Commission.

Earlier this year, it reported that it owned 8,102,492 shares in the cruise line, valued at $ 1.08 billion US as of December 31, 2019, making it the seventh position in the fund’s US stocks. that time.

A regulatory filing filed Wednesday said that as of March 31, the CPPIB still holds an almost identical number of shares in the Miami-based cruise line and that the overall value has dropped to US $ 260.6 million. Using exchange rates at March 31, the decrease of almost $ 820 million would translate into more than $ 1 billion Canadian.

Since deposits only reveal end-of-quarter assets and do not account for transactions during the quarter, no specific gain or loss could be determined. The Agency declined to comment on the investment.

Cruise ship actions such as Royal Caribbean Cruises were among the earliest and hardest hit when the COVID-19 pandemic caused an economic shutdown earlier this year. Several ships have become de facto Petri dishes for the virus, with passengers falling ill in droves. Investors quickly emptied the stocks. Royal Caribbean Cruises stocks, which had peaked in 52 weeks at US $ 135.32, lost more than 85% of their value between mid-January and mid-March.

The CPPIB appears to have become increasingly optimistic about the cruise line during 2019. As of December 31, 2018, it held only $ 2 million in company shares. This quickly reached a surplus of US $ 300 million over the next three quarters – a decent position for the pension fund, but still far below the top names in its portfolio.

Then, in the last quarter of 2019, when stocks climbed almost 23%, the CPPIB seems to have almost tripled the number of shares it held in the stock, making it one of its main equity securities only a few months before hatching.

After reaching US $ 19.25, shares of Royal Caribbean Cruises have rebounded somewhat, trading briefly near US $ 50, before falling. They closed Wednesday at US $ 34.53.

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