Why the Caterpillar divestment “victory” is hollow


Pension fund TIAA-CREF is divesting $73 million from Caterpillar.

Oh good, now there will be no home demolitions? Hardly, but then again we all know that’s not the point of this campaign. There is some important data conspicuously missing from Electronic Intifada and Jewish Voice for Peace press release: How significant is $73 million to CAT’s overall stock value? What percent of Caterpillar’s total stock was held by TIAA-CREF? Allow me to put this into perspective, as someone with an economics background.

This is CAT’s stock price over the past two years, note that its growth closely resembles the overall global recovery:

And here the finance news regarding CAT from today:

If you read that sexy-looking top article, it mentions nothing about TIAA-CREF. The fourth one down titled “Why Caterpillar is Losing to the Dow in 2012” contains a lengthy discussion about the company’s global acquisitions. Trust me, if there anything important about $73 million dollars in shareholder value, it would be here. But it’s not.

Let’s look at Caterpillar’s major shareholders — and let’s be charitable and limit it to mutual funds only — and you’ll see that $73 million doesn’t even put TIAA-CREF within the top 10 holders. It’s actually not even 2% of the total top 10 shareholders.

Holder Shares (#) % Out Value ($) Reported
VANGUARD TOTAL STOCK MARKET INDEX FUND 7,906,247 1.21 842,173,430 Mar 30, 2012
SPDR Dow Jones Industrial Average ETF 6,588,015 1.01 677,050,301 Apr 29, 2012
VANGUARD 500 INDEX FUND 5,784,739 0.89 616,190,398 Mar 30, 2012
SPDR S&P 500 ETF Trust 5,282,358 0.81 542,867,931 Apr 29, 2012
IVY ASSET STRATEGY FUND 4,361,800 0.67 464,618,936 Mar 30, 2012
Vanguard Specialized-Dividend Appreciation Index Fund 3,628,200 0.56 395,909,184 Jan 30, 2012
FIDELITY GROWTH COMPANY FUND 3,510,000 0.54 360,722,700 Apr 29, 2012
COLLEGE RETIREMENT EQUITIES FUND-STOCK ACCOUNT 3,490,367 0.53 371,793,892 Mar 30, 2012
Blackrock Equity Dividend Fund 3,473,900 0.53 379,071,968 Jan 30, 2012

This has not hurt Caterpillar’s bottom-line in a significant way. It won’t. We’re talking about a globe-spanning company with interests (and misdeeds) on every continent. When faced with the full truth of the massive corporate machine of money-making, $73 million is chump change.

Any BDS advocate who has told you that economic pressure is how to end the occupation is lying to you about the true purpose of this campaign. BDSers know this was a tiny jettison of an insignificant amount of stock, which in itself changes little.

They know as well as I do — because we’ve discussed it — that BDS is an axiomatic, symbolic public relations campaign. It is an engagement technique aimed at harnessing passive discontent into PR stunts that raise awareness. The campaign is something to energize, mobilize and structure volunteer passion. But there’s not a single element of the BDS campaign that will actually hurt a company’s pocketbooks or Israel’s economy. Not in the next 10 or even 20 years. (Let’s talk about 25 years from now, if the occupation still continues…)

And to me, all of this energy is wasted on the wrong tactic. Not only is BDS a fantastic misdirection of resources, but the conservative Jewish wing has out-organized it. But that’s another post for later.