A New York state pension fund is facing nearly $30 million in losses after buying CrowdStrike shares just before the tech company caused a global network outage and sent its stock price plummeting.
The New York State Teachers Retirement System (NYSTRS) bought 197,462 shares of the Austin-based cybersecurity company in the second quarter of this year, according to the system’s most recent investor filing.
The shares were worth more than $75 million as of June 30, but with CrowdStrike shares down 38% since the July 19 fiasco, they’re now worth just over $46 million, according to the filing, leaving the company with a $28.5 million loss on its books.
CrowdStrike was down 0.5% to $239.75 in afternoon trading on Monday.
NYSTRS, which provides investment, retirement and disability benefits to public school educators, has assets of about $137 billion, according to its fiscal year 2023 financial statement.
The fund’s overall portfolio returned 9% after fees for the fiscal year ending June 30, 2023, according to its investor relations page.
“As of June 30, 2023, our 10-year return was 8.5% (net of fees) and our 30-year return was 8.3% (net of fees),” the investor relations memo added.
The law requires that the company guarantee a minimum annual return of 6.95 percent; any shortfall is paid from state coffers.
A NYSTRS spokesman 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 running Microsoft Windows, a crisis that saw flights canceled, banking systems taken offline and office computer systems crash completely.
Shareholders filed a class action lawsuit against CrowdStrike earlier this month, accusing the company of making “false and misleading” statements about software testing.
The lawsuit, filed in federal court in Austin, Texas, alleges that CrowdStrike executives misled investors by claiming the company’s software updates were properly tested.
Lawyers for the investors are seeking an unspecified amount of damages from investors who held shares between Nov. 29 and July 29.
Delta Air Lines, one of the hardest hit airlines, also announced it would file a separate lawsuit against CrowdStrike after being forced to cancel around 7,000 flights over five days.
Delta Airlines CEO Ed Bastion claimed the disruptions had cost the airline at least $500 million.
“A disruption of this duration and magnitude is unacceptable and our customers and employees deserve better,” Delta CEO Ed Bastian said in an SEC filing on Thursday.
CrowdStrike denies both allegations and says it will defend itself against the lawsuits.
“Delta continues to make misleading claims,” a CrowdStrike spokesperson told The Washington Post on Monday.
“The CrowdStrike and Delta teams worked closely together within hours of the incident, with CrowdStrike providing technical support above and beyond what is offered on its website.”
The official also noted that CrowdStrike CEO George Kurtz called Delta executive director David DeWalt within four hours of the July 19 incident, and that the company’s chief security officer was “in direct contact with Delta’s CISO.” [chief information security officer] We provided information and support within hours of the incident.”
The Atlanta-based airline announced it plans to sue technology giant Microsoft.
Passengers whose flights were canceled are also suing Delta Air Lines, which is facing a separate investigation by the Department of Transportation.
