Depends on your perspective. If Marathon Oil owns a large block of their own stock, it would be a normal business practice for them to be "speculating" on oil to make sure they get delivery of their company's basic raw material.
CALPERS owning a large block of Exxon Common and playing oil futures contracts, well, maybe that's another story, but money tends to go where it can make a good profit. A previous post made a point about ERISA enforcement on pension plans and futures, but where does that stop? A blanket prohibition on Pensions or other institutions from investing in Hedge funds or natural resource ETFs? No one ever made the argument that capitalism is not messy or does not screw over a few people all the time or even most of the people some of the time. But the alternative is usually considered worse, unless you are a Marxist.
The point where it should stop is where the risk for pension benefits outweighs the returns they could make. The job of a pension fund is to invest money used to pay retirement benefits, not to maximize profits to enrich some young turk who wants his 2-and-20.
Once a pension fund has achieved a level of return to guarantee the obligations of the fund to the beneficiaries, just what point is there in taking on more risk to achieve greater gains?
Because if the fund loses money (lets say that they lose so much money they’re not able to meet their obligations), guess who is on the hook?
You, me and every other taxpayer.