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It’s not often that the general public knows ahead of time that $21 million worth of shares in three major corporations are about to be sold. However, on Saturday the Presbyterian Church U.S.A (PCUSA) announced that it will be selling all of its shares in Caterpillar (NYSE:CAT), Hewlett Packard (NYSE:HPQ), and Motorola Solutions (NYSE:MSI). According to an official church spokeswoman, the total value of the stocks to be divested is $21 million.
The Sales Are Philosophical, Not Financial
Most often when stocks are divested, it is usually done because of financial reasons. However, in this case, these stocks are being sold because of philosophical reasons. Each of these three companies have a major, active presence in the nation of Israel. The PCUSA has objected for years to what it (and others) call “Israel’s occupation of the West Bank.” The PCUSA does not recognize that the territories belong to Israel under the rules of international law. PCUSA is selling its shares regardless of either its or its investments’ financial conditions.
The Impact Is Philosophic, Not Financial
$21 million sounds substantial. As with most all things financial, the substance is almost always relative to some other amount. Take market capitalization, for instance. So, how does $21 million compare to the overall market cap of these three companies? Will it endanger any of them financially?
CAT: $68.3 Billion
HPQ: $64.0 Billion
MSI: $17.0 Billion
That is a total of $149.3 billion, making the PCUSA’s $21 million investment a grand total of .01% of the total market cap amount. Let me spell that out. The PCUSA’s investment in represents 1/100th of the market capitalization of the three companies combine. Although we do not know how its assets are distributed, it is fair to guess that most would be in CAT and HPQ. Regardless, all three have relatively high amounts of cash and excellent cash flow.
So, here is the story once the chaff is blown away. $21 million worth of CAT, HPQ, and MSI will soon become available, perhaps at a lower than market price, depending on how devoted the PCUSA is devoted to its philosophy as opposed to its finances. Other than some publicity, which never hurts, there should be minimal impact on any one of the three. The PCUSA will have made its statement and its decision will rapidly disappear into the past, discovering that its decision to divest, was one to divest its own bully pulpit, leaving it with nothing more than an opinion. Those are useless because everyone already has one.
It will, however, be interesting to see what happens in New York on Monday. CAT ‘s share price closed up 1.99% to 109.38, the highest point it has reached since early 2012. HPQ was down 0.75% at 34.22, just one dollar off of its 52-week high, whilst MSI shares posted a narrow gain of 0.01% to 67.07, also just off its own 52-week high of 68.53.
