Anheuser-Busch InBev Hit with Shareholder Class Action Suit

Brewing giant Anheuser-Busch InBev, and certain of its executives, has been hit with a class action lawsuit on behalf of shareholders who purchased the company’s stock from March 1, 2018, through Oct. 24, 2018. The complaint alleges that the company made false and misleading statements regarding its financial reporting during that time period.

The lawsuit was filed in the US District Court for the Southern District of New York on behalf of the City of Sterling Heights General Employees’ Retirement System. The case is centered on whether Anheuser-Busch InBev and its executives violated federal securities laws by allegedly failing to disclose adverse information regarding its business, operations, and prospects.

The plaintiffs say the company “deceived the investing public regarding Anheuser-Busch’s business, operations, liquidity, markets, deleveraging efforts, management, and present and future business prospects, and the intrinsic value of Anheuser-Busch ADS.”

The complaint alleges that the company made false and misleading statements and failed to disclose that its cost-cutting measures “had largely run their course,” and that the devaluation of key emerging market currencies and input cost inflation was having an adverse effect on the company’s margins, EBITDA, and profitability.

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The plaintiffs also said that Anheuser-Busch had been experiencing lower-than-expected growth and profits in certain key markets, and that it was not going to be able to maintain its dividend at the time and still meet its deleveraging targets. Additionally, the complaint said Anheuser-Busch was at risk of having its credit ratings downgraded.

As a result of the alleged materially false and misleading statements “Anheuser-Busch ADS traded at artificially inflated prices during the class period,” said the complaint. “Plaintiff and other members of the class purchased Anheuser-Busch ADS relying upon the integrity of the market price of Anheuser-Busch ADS and market information relating to Anheuser-Busch, and have been damaged thereby.”

On Oct. 25, 2018, the company reported its financial results for the quarter ended Sept. 30, and announced that it had cut its dividend by 50% to “accelerate deleveraging.” Following the news, Anheuser-Busch InBev’s share price fell to $74.54 from $82.25 the previous day—a drop of 9.37%.

“When the truth about the company was revealed to the market, the price of Anheuser-Busch ADS fell significantly,” said the complaint. “The decline in the price of Anheuser-Busch ADS as the corrective disclosure came to light were a direct result of the nature and extent of defendants’ fraudulent misrepresentations being revealed to investors and the market.”

Tags: Andeuser Bursch, Anheuser-Busch InBev, City of Sterling Heights General Employees’ Retirement System, Lawsuits

The investment portfolio of the C$201.4 billion ($151.4 billion) Ontario Teachers’ Pension Plan rose 6.3% for the first half of the year, increasing its total market value by C$10.3 billion.

“In the first half of the year, we had positive performance across every asset class in our portfolio, led by fixed income,” Ontario Teachers’ CIO Ziad Hindo said in a statement. “Over the last few years, we have been transitioning the asset mix to a more balanced approach from a risk perspective, and as part of this transition, we increased our allocation to the fixed-income asset class.”

As of June 30, the plan’s total investment in fixed income was C$92.8 billion, up from $77.7 billion as of Dec. 31.

“The role of fixed income is simple—it’s to provide us with diversifying returns in times when the global economy slows and we run into a recession,” Hindo said in a media briefing to discuss the mid-year results, “and I think it’s safe to say that over the last year or two we have seen a slowdown in the global economy.”

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As of the end of 2018, the last date for which the pension provides full-year figures, the pension had an annualized total fund net return of 9.7% since inception. The five- and 10-year net returns, as of the end of 2018, were 8.0% and 10.1%, respectively, which surpassed their benchmark returns of 6.5% and 8.1%, respectively.

The plan invests in 35 global currencies and in more than 50 countries, and currency had a negative 1.3% impact on the total fund, resulting in a loss of C$2.5 billion. The loss was mainly attributed to the appreciation of the Canadian dollar relative to various global currencies including the US dollar, the euro, and the British pound.

Based on the plan’s statement of investment policies and procedures, the portfolio allows an asset mix that includes equities to be in a range of 30% to 40%; fixed income to be in a range of 23% to 77%; real assets in a range of 18% to 29%; inflation-sensitive investments of between 11% and 21%; credit of between 3% and 13%; and absolute return strategies of 4% to 14%.

“Our focus is on achieving stable results that help deliver financial security to our members through a variety of market conditions,” said Ontario Teachers’ CEO Ron Mock in a statement. “Our balanced portfolio approach is delivering strong returns that are in line with our long-term objectives.”

In July, the plan named Jo Taylor to be its new CEO and president effective Jan. 1, as Mock announced he would retire at year’s end. Taylor joined Ontario Teachers’ in 2012, and was appointed to his current role of executive managing director, global development, in August 2018.

The Ontario Teachers’ defined-benefit plan invests and administers the pensions of the province of Ontario’s 327,000 active and retired teachers.

Tags: Canada, Ontario Teachers' Pension Plan, Pension, Returns, Ziad Hindo