What are Elephants?

Elephants are large institutions that make big trades.

How Do Elephants Work?

CalPERS (the California Public Employees' Retirement System) is the nation's largest pension fund. More than 1.6 million people there are employees of public institutions such as schools and local governments. To ensure that the fund has enough money to make pension payments when employees retire, it invests that money in stocks, bonds, venture capital, real estate and a variety of other assets. In 2012, CalPERS had about $234 billion invested and another $3 billion in cash.

Accordingly, it can make some very large trades and has a lot of influence in the market. CalPERS can also be a source of capital for growing companies: It invested $34.2 billion in private equity in 2012.

Why Do Elephants Matter?

When elephants make trades, they are often large trades that can spike (or tank) the price of a stock or other security quickly. Elephants aren't just big influencers of the markets; they're big 'gets' for brokerage firms, advisory firms, or any other financial institution that retains them as customers. After all, fees are often a percentage of trade size or asset size, and thus it's usually a big deal to 'bag an elephant.'