Finance

PIF cuts down on Starbucks and goes for chips in US rejig

August 15, 2024, 1:35 PM

Customers queue at a Starbucks in Jeddah airport. Saudi wealth fund PIF has decreased its Starbucks call options by 138,800 shares

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Saudi Arabia’s Public Investment Fund has adjusted its US equities portfolio, including trimming its call options on Starbucks.

The global coffee chain has faced boycott calls over its perceived pro-Israel stance in the ongoing Gaza conflict, a claim it denies.

In its latest Securities and Exchange Commission filing, PIF decreased its Starbucks call options by 138,800 shares, a 3.7 percent reduction.

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A call option is a contract that gives a share trader the right, but not the obligation, to buy a specified asset at a set price on or before a specified date.

The cut in PIF’s call options for Starbucks follows a significant cut in holdings for the Seattle coffee brand last quarter. The fund nearly halved its position from 6.3 million shares to 3.8 million, bringing the valuation down to $282 million.

Starbucks is one of several US brands whose sales have been impacted in the Middle East due to the war.

Despite these challenges, Starbucks expanded its presence in the region over the past year.

The largest increase in number of outlets occurred in Saudi Arabia, with 55 new locations, followed by Turkey and Dubai.

PIF’s total US equity holdings increased by $100 million from the previous quarter, rising to $20.7 billion.

Uber remains PIF’s largest holding, valued at $5.3 billion and representing nearly 26 percent of the Saudi sovereign wealth fund’s US portfolio.

Lucid follows with a valuation of $3.6 billion, accounting for about 17 percent of the portfolio, down from 19 percent.

The decrease aligns with recent market challenges faced by the electric vehicle sector.

The fund closed out its position in weight loss biotech Allurion Technologies, selling over 1 million shares.

It made its largest reduction in American travel technology company Booking Holdings call options, down by 19,500 shares or 25 percent.

American chip maker Advanced Micro Devices call options were increased, with PIF adding 1.2 million shares, bringing the total market value to $374 million.

The fund tripled its position in the Brazilian digital banking company Nu, adding 2.6 million shares.

Additionally, it increased its bullish call positions in major technology stocks, including PayPal, Microsoft and Meta Platforms, the parent company of Facebook. This aligned with broader market trends where investors are positioning themselves for potential rebounds in these sectors.

Last quarter, PIF reduced its shareholdings in several prominent tech stocks, including Amazon, Microsoft, Salesforce and PayPal, likely to be in response to volatile market conditions.