Posted on 11/22/2004 8:41:55 AM PST by NormsRevenge
CalPERS isn't afraid to break from the pack. Despite warnings that the risky hedge fund industry is nearing a bubble, the mammoth California Public Employees' Retirement System is forging ahead in the Wild West of the investment world, once the sole domain of the super-rich.
CalPERS will double its hedge fund investment to $2 billion, still a sliver of the $177.8 billion in assets held by the pension fund. "Our hedge fund program has been widely outperforming our U.S. index fund, with a quarter of the volatility," said Mark Anson, CalPERS' chief investment officer. "The program has been a success."
Analysts say the move signals another key endorsement for the controversial industry by the nation's largest public pension fund. CalPERS' decision four years ago to start investing in hedge funds helped establish them as legitimate options for pension plans.
Since then, billions of dollars have poured into hedge funds as pension systems sought new opportunities to rebound from the massive stock losses suffered during the bear market.
"They're a bellwether institutional investor. Their entry was a kind of signal that it is safe to go into the park," said Conrad S. Ciccotello, a professor at the Robinson College of Business at Georgia State University.
"Every trendsetter adds legitimacy to whatever they do," said William Wechsler, a vice president at Greenwich Associates, a Connecticut research and consulting firm for institutional investors.
The loosely regulated hedge funds are considered high-risk, racy alternatives to stocks, bonds and other traditional investments. The goal is to make money regardless of whether financial markets are bullish or bearish.
The hedge fund managers are often described as gunslingers who test their skills in picking bad and poor companies.
(Excerpt) Read more at sacbee.com ...
hedge funds = 'No fault' investing for dummies?
And when the inevitable bad year comes, these imbecils will be the first to sue.
Their only recourse is to withdraw their money if they want to protest.
And the way investment agreements are structured by the hedge funds, they would often be screwing themselves.
Hedge funds were designed specifically to avoid such frustrations.
fresh out of b school, are you?
I never went to b-school. However, I know quite a bit more about hedge funds than you do.
really? did you ever have your own?
/pearls,swine.
And please, don't twist Scripture to make your sad, abusive attitude more "amusing".
Face it - I pointed out quite politely why hedge funds are not subject to the same investor pressures as mutual funds are and you responded with an uncalled-for insult.
I had my own before everyone thought they knew all about them.
Their motives do not necessarily reflect what's in the best interest of anyone but the management firm that's managing some of their money at the moment.
It matters not whether Calpers owns publicly traded shares or privately placed shares. It matters not how the partnership agreement is written. If they want to sue for performance, they will. Surely someone with your extensive experience is aware of that. Why? Because that's what people do when they lose lots of money. Especially bean counters and lackeys who manage union and other politically charged money. Again, your vast experience ought to testify to that reality.
Thank you, however for reminding me why I left the business while you were still sucking your thumb in order to run my own money. Now run along. Surely you have a bachelor party or something to attend.
This is incoherent.
I'll connect the dots for you, under the principle that "an attack unanswered is an attack accepted."
OK.
It matters not whether Calpers owns publicly traded shares or privately placed shares. It matters not how the partnership agreement is written. If they want to sue for performance, they will.
Of course they can sue.
Your statement above was that they could engage in shareholder activism of the kind that plagues mutual funds, not simply that they could sue.
My point was that Calpers could conceivably go to the managers of Mutual Fund X and say: we have purchased 15% of your shares and we demand that you divest from Israel, or else we will dump our shares as quietly as possible and then publicly announce that we have divested, creating a lack of confidence in the manager of the fund and any publicly traded shares the manager may have.
A hedge fund manager (a) can control exactly who owns how many shares of his fund by simply prohibiting assignments and (b) does not have to worry about public market movements of his equity shares.
He can simply tell Calpers "OK. Here's your redemption. Don't let the door hit your ass on the way out."
Shareholder activists can only become a huge problem if they are able to accumulate large stakes in a public market you cannot control.
On the suing front, the smart hedge fund manager requires that his investors supply him with a big boy letter that severely limits their ability to mount a substantive lawsuit purely on the basis of returns.
Surely someone with your extensive experience is aware of that. Why? Because that's what people do when they lose lots of money. Especially bean counters and lackeys who manage union and other politically charged money. Again, your vast experience ought to testify to that reality.
My experience in finance tells me that hedge funds can choose their investors carefully and not allow any single investor to dictate to them. I'm not saying that some hedge managers may not be allured by the prospect of managing the assets of such troublesome customers, but, unlike mutual fund managers they can avoid such problems.
Thank you, however for reminding me why I left the business while you were still sucking your thumb in order to run my own money.
I guess if you're consistently wrong you need to make snarky comments.
Now run along. Surely you have a bachelor party or something to attend.
Sorry, Mr. Buffett, not a big fan of the bachelor parties. I'm a family man. I generally only attend family-friendly events.
I guess you've picked up your knowledge of Wall Street from watching Hollywood movies.
/discussion.
You were wrong about the pressures investors can bring to bear on a hedge fund vs. a mutual fund.
Just completely, totally wrong.
So you go off on tangents to distract from your blatant error.
That's the real end of the discussion.
Published: December 2, 2004
The ouster of the president of California's public pension fund has raised questions about whether pension funds, endowments and other big activist investors will be able to keep wielding influence in corporate governance campaigns.
The change at the top of America's largest pension fund also underscores a growing awareness of the political and economic power lying largely untapped in the nation's retirement money - roughly $6 trillion - and an escalating dispute over how that power should be used.
The fund president, Sean Harrigan, was removed yesterday from the $178 billion California Public Employees Retirement System, known as Calpers, America's largest pension fund. He said his ouster was retaliation for the campaigns that he and others had been leading to change behavior at companies like Disney, Safeway, the New York Stock Exchange and Kohlberg Kravis Roberts.
Neither the NYSE nor KKR are publicly held, of course, yet that doesn't keep calpers from trying to wag the dog.
Keep paying attention, you'll see I was right on the money, as usual.
the entire article is available at NY Times Online. You must be registered to view it.
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