A New York state pension fund is facing nearly $30 million in losses after amassing a stake in CrowdStrike — just before the IT firm caused a global network meltdown that sent the company’s stock into a tailspin.
The New York State Teachers’ Retirement System (NYSTRS) bought 197,462 shares in the Austin-based cybersecurity company in the second quarter of this year, according to its latest investor relations report.
That stake was worth more than $75 million on June 30, the filing shows, but a 38% collapse in CrowdStrike shares since the July 19 debacle puts the current value at just over $46 million — a paper loss of $28.5 million.
CrowdStrike was down 0.5% at $239.75 in afternoon trading Monday.
NYSTRS — which provides investment, retirement and disability benefits to public school educators — has roughly $137 billion in assets, according to its 2023 financial statement.
The fund’s total portfolio returned 9%, net of fees, for the fiscal year ended June 30, 2023, according to its investor relations page.
“As of June 30, 2023, our 10-year rate of return was 8.5% (net of fees) and our 30-year rate of return was 8.3% (net of fees),” the investor relations note added.
It is bound by law to guarantee an annual return of at least 6.95%. Any shortfall must come out of the state’s coffers.
A spokesperson for the NYSTRS said the fund “does not comment on individual stock holdings.”
CrowdStrike has been under fire since a faulty software update crashed more than 8 million computers using Microsoft Windows. The crisis grounded flights, forced banking systems offline and brought office computer systems to a shuddering halt.
Shareholders launched a class legal action against CrowdStrike earlier this month, accusing the company of “false and misleading” statements about its software testing.
The case, filed in the Austin, Texas federal court, claims that CrowdStrike executives defrauded investors by insisting that the company’s software updates had been properly tested.
Lawyers for the investors are seeking an unspecified amount of compensation for investors who owned shares between Nov. 29 and July 29.
Delta, which was the hardest hit of the airlines, has also said it would launch a separate case against CrowdStrike after it was forced to cancel some 7,000 flights in the space of five days.
Delta CEO Ed Bastion claimed the disruption cost the company at least $500 million.
“An operational disruption of this length and magnitude is unacceptable, and our customers and employees deserve better,” Delta’s CEO Ed Bastian said in an SEC filing on Thursday.
CrowdStrike denies the allegations in both cases and says it will defend itself against the lawsuits.
The Atlanta-based carrier said it plans to sue tech giant Microsoft.
Passengers who saw their flights axed are also suing Delta, which faces a separate probe from the Department of Transportation.
