Wednesday, October 28, 2009

CalPERS Monthly Update: October 2009

CalPERS' balance sheet continued to recover throughout the Summer, with a 25% rebound from the recent low:

Here's the spin:

"This result is not a surprise; it is about what we expected given the collapse of markets across the globe," said Joe Dear, Chief Investment Officer. "The good news is we have the opportunity to capture future returns because of our long- term investment horizon. The System has more than enough cash through contributions and income from investments to meet our present liabilities, so we are in a good position to ride out the current downturn and come out stronger."
Meanwhile, the scandals keep piling up. This must be the "swimming naked" part of that famous Warren Buffet quote:

October 15, 2009: CalPERS targets a former L.A. deputy mayor in probe of investment agent fees
The state pension fund, as part of a larger investigation of the awarding of investment contracts, is looking at $50 million in fees paid to Arvco, headed by Alfred Villalobos. He denies wrongdoing.
October 21, 2009: California accuses bank of raiding pension funds
The state attorney general says a State Street Corp. of Boston cheated CalPERS and a teachers pension agency out of nearly $57 million
October 23, 2009: CalPERS reviewing tie with Apollo Management after steep losses
Many of the pension fund's Apollo investments suffered severe losses in the bear market that ended in March but have rebounded since then.

For example, the Apollo Investment Fund VII, which was formed in 2008, lost 60% of its value by March 31 but was down only 16% on June 30, CalPERS reported.
October 23, 2009: N.Y. court deals CalPERS a blow on housing project
CalPERS' already shaky $500 million investment in a New York housing complex suffered a setback Thursday when a court ruled the complex illegally raised rents.

The partnership is dangerously low on cash and might soon go into default, the Wall Street Journal reported last week.

That would likely wipe out the investments of CalPERS and others. The state's other big public pension fund, the California State Teachers' Retirement System, already wrote off its $100 million investment.
October 24, 2009: Land deal advisor resigns from Calpers
The real estate investment manager who led the California Public Employees' Retirement System, the nation's largest pension fund, into a money-losing land venture has resigned as an adviser to the fund, a spokeswoman for MacFarlane Partners said on Saturday.
While the scandals percolate, here's a highlight from the legislative bitch session that took place last week (via Mish, who is spending a lot of time on CalPERS issues lately)

It's clear that awareness of problems at CalPERS is growing. State employees should brace for some stiff political headwinds as the costs and scandals mount.

1 comment :

Anonymous said...

Cherry picking a starting point...

How about 2005 = 189B
2004 = 166B
2003 145B

The fund has done well over any measure of time that matters for the long haul, and it has beat the market too. Nothing to panic about.

Now, the fraud, waste, abuse...that's another thing.