The nation's second-largest pension fund is standing behind General Electric.
The industrial conglomerate is down about 47 percent from 12 months ago. It also cut its dividend in half in November.
"It's got a great mix of a whole bunch of portfolio companies," said Chris Ailman, chief investment officer of the California State Teachers' Retirement System.
On Wednesday, GE dropped the most in a single day of trading since April 2009 after CEO John Flannery said the company will "have to see how" the turnaround plan "plays out" before deciding whether to cut the company's dividend again.
However, sources told CNBC's David Faber on Thursday that GE does not plan to cut its dividend in 2019. Flannery's remarks may have been misinterpreted, according to those sources.
"We think it's going to improve in value over time," he said. "The dividend is important but it is not critical. It is more important for the pensioners but for us as a shareholder, we're interested in the total return of the stock."
Meanwhile, he thinks Flannery, who took the helm of the beleaguered company in August, is off to a good start.
"He needs to continue to diversify the board. We'd like to see more outside ideas come into that board because there's such a diverse set of product mix," said Ailman.
"One of the challenges for Wall Street is trying to figure out what exactly GE is."
However, he anticipates a trying time ahead for the new CEO.
That's because GE is a "giant, giant battleship."
"When you're a huge ship in this ocean, trying to figure out how to navigate this world, he's going to have challenges in front of him. We're going to give him some time to see how he performs," Ailman added.