Ed Lin

D-Wave Quantum rocketed earlier this month on investor excitement for quantum computing. D-Wave's largest investor took the opportunity to sell nearly $80 million of shares.

Google Quantum AI put quantum computing front and center on Dec. 9, when the Alphabet unit announced its latest quantum chip, dubbed Willow, a landmark achievement in the field. Interest in D-Wave had already been picking up in November, with shares of the supplier of quantum computers going from $1 early that month to close at $4.65 on the day of the Willow announcement. From there, D-Wave's share price didn't materially rise for a few days, although trading volume remained elevated.

The Public Sector Pension Investment Board, one of Canada's largest pension investment managers, sold into the flow of trading, selling 18.4 million D-Wave shares from Dec. 10 through 12 for a total of $78.8 million, an average price of $4.29 each. PSP, as the manager is known, now owns 1 million D-Wave shares, and 40.1 million shares issued by a Canadian unit of D-Wave that can be converted to U.S.-traded shares and sold, according to a form it filed with the Securities and Exchange Commission.

PSP's average sale price for D-Wave stock may not seem like much, but it's a marked improvement from leaner times, before the revival in interest in quantum computing. D-Wave shares ended their first day of public trading, Aug. 8, 2022, at an even $10, but dove 86% to end that year at $1.44. In 2023, shares dropped 39% to end at 88 cents.

In response to a request for comment on the stock sales, PSP emailed the statement, "As part of our ongoing portfolio management activities, we regularly review and adjust our investments to optimize portfolio construction. This approach allows us to manage risk and meet the responsibilities of our mandate. PSP Investments remains committed to our total fund long-term investment strategy, which involves diversification across geographies, sectors, and investment products."

The sales are the first for the pension manager since D-Wave went public through a merger with a special-purpose acquisition company in August 2022. It remains D-Wave's largest investor, with an 18% stake, according to S&P Global Market Intelligence.

PSP, which invests funds for the pension plans of the Public Service, the Canadian Armed Forces, the Royal Canadian Mounted Police and the Reserve Force, has seen two of its representatives resign from D-Wave's board in recent months, before the stock sales. Philip Adam Smalley III, a managing director at PSP, left D-Wave's board in July, while Ziv Ehrenfeld, a managing director on the private equity team for PSP, left on Dec. 6.

The departures may be related to D-Wave's paying off a $50 million loan from a PSP affiliate that had specified that two employees of PSP or its affiliates would serve on D-Wave's board. D-Wave paid off the remaining balance of the loan after the end of the third quarter.

PSP didn't comment on the departure of PSP representatives from D-Wave's board.

D-Wave didn't respond to a request for comment.

Inside Scoop is a regular Barron's feature covering stock transactions by corporate executives and board members -- so-called insiders -- as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Ed Lin at ed.lin@barrons.com

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December 19, 2024 13:59 ET (18:59 GMT)

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