CalPERS focus list of companies with poor financial performance and corporate governance includes Marsh & McLennan Cos. Inc. The firms share price decreased by 36.98% in the five years ended Feb. 28, while share prices of its peer group increased by an average 29.32%, confirmed CalPERS spokesman Brad Pacheco.
The $229 billion California Public Employees Retirement System, Sacramento, holds $77.4 million of Marsh & McLennan stock. Marsh & McLennan, the parent of Putnam Investments and Mercer Human Resource Consulting, also would also not agree to adopt a policy to require shareowner approval before enacting any poison pill provisions, according to CalPERS focus list. CalPERS also said the company has provided excessive severance pay agreements to top executives.
Since late 2004, Marsh & McLennan has significantly enhanced its corporate governance practices, said Rich Myers, a company spokesman. He added that CalPERS representatives have discussed these issues with Marsh & McLennan CEO Michael Cherkasky and Peter Beshar, general counsel. Were disappointed that CalPERS has chosen to place us on this list, he said.
CalPERS named 11 companies to the annual list this year, said Mr. Pacheco. Others on the list included food industry giant Sara Lee Corp., Downers Grove, Ill., and drug company Eli Lilly and Co., Indianapolis.
Kansas hires search firm
Kansas Public Employees Retirement System, Topeka, hired executive search firm EFL Associates to help plan officials find two investment officers, one for real estate and one for alternatives, said Robert Vince Smith, CIO of the $13.3 billion system. EFL is recruiting candidates, but no timeframe has been established for making the hires.
Lehman Brothers, AXA up
Lehman Brothers reported $236 billion in assets under management for its fiscal first quarter ended Feb. 28, according to a news release. Lehmans assets increased 4.9% for the quarter, while its assets grew 25.5% during the 12-month period. Assets increased in its equity, fixed-income, money market and alternative investment businesses, in both the recent quarter and the year. The largest increase was in money markets, which grew 16.7% during the quarter and 75% for the year, to $56 billion at the end of February. Lehman now has $96 billion in equity assets, $62 billion in fixed income and $22 billion in alternatives.
Separately, AXA Investment Managers saw assets under management rise 12% to €485 billion ($639.6 billion) in 2006, with net inflows of €23 billion from institutional clients during the year, according to a statement. Revenue rose 40% to €1.1billion, compared to a 28% rise in 2005, said Marianne Huve-Allard, global head of communications. The jump in revenue reflected increased performance fees as well as client demand for higher margin and alternative investment products.
Laurus closing flagship
Laurus Capital Management, a hedge fund manager, will close its existing flagship fund, the Laurus U.S. fund, on May 1. Dennis Pollack, senior managing director, said the fund is being closed to preserve shareholder value and protect performance. Existing investors will be permitted to add to their investments in the $1.5 billion fund in the interim, Mr. Pollack said.
On June 1, Laurus Capital will launch the Valens Fund, a clone fund which will use the firms core investment strategy of investing in publicly traded U.S. microcap and small-cap companies seeking growth capital. Two share classes will be available, the first with a one-year lockup, a 2% management fee and 20% incentive fee and an early redemption option. The second share class offers fees of 1.5% and 15% in exchange for a hard three-year lockup and no redemption option.
CalPERS, CalSTRS post gains
SACRAMENTO, Calif. CalPERS returned 15.4% on its investments in 2006, according to spokesman Clark McKinley. The $229 billion California Public Employees Retirement System, Sacramento, posted an average annual return of 13% for the three years ended Dec. 31 and 10% for the five years. Real estate returned 27.6% for the year ended Dec. 31, while international equities returned 25.2%; private equity, 20.9%; domestic equities, 15%; hedge funds, 13.4%; and fixed income, 5%. The fund has 40.3% of its assets in domestic equities; 22.8% in fixed income; 22.8%, international equities; 7.9%, real estate; 5.6%, alternatives; and the rest in cash.
Separately, CalSTRS returned 16.6% for 2006, said spokeswoman Sherry Reser. The $157.9 billion California State Teachers Retirement System, Sacramento, posted an average annual return of 13.3% for the three years ended Dec. 31 and 10.3% for the five years. International equity returned 26.4% for the year ended Dec. 31, while real estate returned 26.1%; alternatives, 21.9%; domestic equity, 16%; and fixed income, 4.8%. The fund has 43.1% of its assets in domestic equity; 22.2% in international equities; 20.1%, fixed income; 8.3%, real estate; 6%, private equity; and 0.3%, cash.
CalPERS, Time Warner settle
SACRAMENTO, Calif. CalPERS reached a $103.5 million settlement in its lawsuit against Time Warner Inc., confirmed Clark McKinley, spokesman for the $229 billion system. The lawsuit, filed in 2003 by the California Public Employees Retirement System, Sacramento, claimed Time Warners reports of AOL LLCs advertising revenue and income were overstated before the two companies merged in 2000. CalPERS had been part of a class-action suit against Time Warner but filed an individual suit. Peter Mixon, CalPERS general counsel, said in a news release that CalPERS settlement will give the system about 17 times more money than it would have received if it had remained in the class action. The settlement does not include accounting firm Ernst & Young, which is still a defendant. Mr. McKinley declined to say how much the fund is seeking to recover from Ernst & Young. CalPERS owns 18.9 million shares of Time Warner stock valued at $366.9 million.
A call to a Time Warner spokesman Keith Cocozza was not returned by press time.
401(k) participants stay course
LINCOLNSHIRE, Ill. Most 401(k) plan participants remained calm despite the stock market plunge on Feb. 27, according to the Hewitt 401(k) index for February. Although the daily net transfer activity among 401(k) plan participants was 4.8 times the usual level for that day, participants traded a net 0.16% of plan balances. Large U.S. equity funds had the highest outflows, $44 million.
For the month, company stock experienced the largest outflows, $311 million. Large U.S. equity funds followed, with $77 million. In January, Hewitt saw inflows of $148 million for large U.S. equity funds and outflows of $407 million for company stock.
IPOs to join Russell indexes
TACOMA, Wash. Russell Investment Group will add 35 initial public offerings to the overall Russell 3000 index after the U.S. equity markets close on March 30, according to spokeswoman Stephanie DiIorio. The IPOs will move directly into the small-cap Russell 2000 index, she confirmed. Russell adds IPOs to its indexes at the end of each quarter.
The companies include seven in financial services, such as asset management firm Kohlberg Capital Corp., New York; seven firms in health care and five technology companies.
Louisiana Muni Police runs 2 shortlist searches
BATON ROUGE, La. Louisiana Municipal Police Employees Retirement System is conducting invitation-only searches for two managers, confirmed Henry Dean, chairman of the $1.5 billion systems board. One firm will manage $140 million to $150 million in core-plus fixed income and the other will handle $140 million in international value equities. The board wants to move Orleans Capital Managements core fixed-income portfolio to a core-plus strategy, Mr. Dean said. Orleans Capital has bid for the core-plus mandate. The systems search for an international value manager was prompted partly by the performance of the portfolios current manager, Pyrford International, Mr. Dean said. A Pyrford official declined comment. Manager selections are expected by the end of May.
Summit Strategies assisted.
Lehman Brothers acquires 20% of D.E. Shaw
NEW YORK Lehman Brothers acquired a 20% stake in the investment management units of D.E. Shaw in a deal that closed March 12. Randall Whitestone, a Lehman spokesman, would not disclose the terms of the deal other than noting it involved an immediate payment and future contingent payment. Our stake in the D.E. Shaw group, which offers a broad array of alternative and long-only products, is consistent with our pioneering program of minority position in world-class investment platforms, George H. Walker, Lehmans global head of investment management, said in a news release. Lehman has minority stakes in alternative asset managers including GLG Partners, Marble Bar Asset Management, Ospraie Management and Spinnaker Capital Management. Lehman managed about $225 billion as of Nov. 30, while D.E. Shaw managed about $29 billion as of March 13. Lehmans minority ownership will not affect D.E. Shaws day-to-day operations, said Trey Beck, managing director and head of investor relations for D.E. Shaw.
Illinois governor proposes bonds, lottery lease to pare deficit
SPRINGFIELD, Ill. Illinois Gov. Rod Blagojevich proposed issuing pension obligation bonds and leasing the state lottery to generate $26 billion in revenue and reduce the states pension shortfall to $15 billion from more than $40 billion, according to the text of the governors State of the State address March 7. The unfunded pension liability was $37 billion in November. In his address to the General Assembly, Mr. Blagojevich did not provide further details on his plan to reduce the shortfall.
K.C. Schools seeking auditor
KANSAS CITY, Mo. Kansas City Public School Retirement Systems investment committee is looking for a firm to audit the funds financial statements for 2006, 2007 and 2008, according to a posting on the plans website. Proposals are due 3 p.m. CDT April 3; the RFP is available at www.kcpsrs.org/request_for_proposal.htm. Further details were not available. Cecelia Carter, executive director of the system, did not return calls requesting comment. The plan had $760 million in assets as of June 2005, according to the 2007 Money Market Directory.
MB Investment Partners buys Jamison Prince
NEW YORK MB Investment Partners will acquire Jamison Prince Asset Management, confirmed Ron Altman, senior managing director at MB Investments. Terms were not disclosed. Combined, the two New York-based money managers will have $1.6 billion in assets from institutional and high-net-worth clients. Michael Jamison, president and chief executive officer of Jamison Prince, will become one of three managing partners at MB Investments, along with Robert Machinist and Mark Bloom. Jack Harris, managing director at Jamison Prince, will continue to run the firms large-cap equity strategies and research along with Mr. Jamison. The deal is expected to close before the end of the quarter, said Mr. Altman. MB Investment Partners is also the holding company for Boston-based Ironwood Investment Management..
Sketch of person of interest issued in pipe bomb probe
CHICAGO Officials of the U.S. Postal Inspection Service released a composite sketch of a person of interest who might have information on pipe bombs sent in late January and early February to American Century Investments and Perkins, Wolf, McDonnell, a subadviser of Janus Capital Group. A person who calls himself the Bishop sent packages which contained the bombs and threatening letters from a post office in Rolling Meadows, Ill. The sketch can be seen at http://www.usps.com/postalinspectors/wanted/Bishop%20Interest.htm. The U.S. Postal Inspection Service is offering a $100,000 reward for information leading to an arrest.
Pension funds lead parade to 130/30 strategies
NEW YORK About $50 billion are now invested in 130/30 strategies, led mostly by pension funds, according to a new Merrill Lynch report. The bulk of 130/30 strategies have been offered by quantitative managers at large firms, such as State Street Global Advisors, according to the report, but more fundamental managers and hedge funds are increasingly offering or considering the portfolios. Merrill Lynch said in the report that it expects a wave of such asset managers to begin offering 130/30 strategies this year, as the gap between traditional managers and hedge funds continues to narrow. The full report is posted on the Merrill Lynch website, at http://rsch1.ml.com/9093/24013/ds/59685438.PDF.
S&P debuts private equity index
NEW YORK Standard & Poors introduced the S&P Listed Private Equity index, which has a $250 million market capitalization, said David Guarino, spokesman. The investible index is made up of 25 private equity companies listed in North America, Europe and the Asia-Pacific region. Buyouts comprise 70% of the index, and the rest are venture capital companies. The top 10 companies in the index include American Capital Strategies, Ares Capital and MCG Capital, all listed in the U.S.; 3i Group and Intermediate Capital Group, in the U.K.; and KKR Private Equity Investors in the Netherlands.
\Vanguard debuts new FTSE All-World ex-U.S. index fund
VALLEY FORGE, Pa. Vanguard introduced its FTSE All-World ex-U.S. index fund, said spokesman John Demming. The strategy will offer three share classes: investor shares, with an estimated expense ratio of 0.40%; institutional shares, with an estimated ratio of 0.15%; and American Stock Exchange-traded ETF shares, with an estimated ratio of 0.25%. The fund will aim to capture 95% of the investible developed and emerging markets outside the U.S. Vanguard will now offer 28 ETFs, of which four track international stock markets. Mr. Demming said Vanguards ETF assets doubled in 2006 to $22.3 billion, lifting the firms share of that fast-growing market to almost 13%, from almost 9%.
Lerach Coughlin leads in litigation settlements
BETHESDA, Md. Lerach Coughlin Stoia Geller Rudman & Robbins led the list of the top 50 plaintiffs law firms for class-action securities litigation settlements in 2006, according to Securities Class Action Services, a unit of Institutional Shareholder Services. The firm attained 41%, or $7.3 billion, of the $18.3 billion in total settlements that received final approval last year. The $6.6 billion Enron Corp. settlement, the largest securities class-action settlement ever reached, was among the 30 settlements approved in 2006 in which Lerach Coughlin was lead or co-lead counsel, Adam T. Savett, SCAS vice president, said in an interview. Bernstein Litowitz Berger & Grossman ranked second, achieving a total $2.6 billion in nine settlements last year, according to the SCAS data. SCAS gives full credit for the settlement to both lead and co-lead counsels in the rankings. In 2005, final settlements totaled $91 billion, including the $6.1 billion WorldCom Inc. settlement, the second-largest settlement ever.
BNY ConvergEx introduces cross-trading service
NEW YORK BNY ConvergEx Group, an agency brokerage and investment technology firm, launched ConvergEx Cross, a new block cross-trading service, confirmed Gary Ardell, managing director and head of the financial engineering and advanced trading solutions unit. ConvergEx Cross enables both buy-side and sell-side traders to set default preferences to include or exclude certain types of trading partners and allows the use of both negotiated and automated crossing preferences simultaneously, Mr. Ardell said. Along with the benefit of customization, unlike other crossing services, with (ConvergEx Cross) liquidity is immediately available, so that from day one customers will benefit, he said.
Aquiline closes first fund at $1.1 billion
NEW YORK Aquiline Capital Partners, a new private equity firm, closed its first fund, the $1.1 billion Aquiline Financial Services Fund, said Stephanie Olijnyk, a company spokesman. Investors include the South Carolina Retirement System Investment Commission, which oversees the $27 billion South Carolina Retirement Systems, Columbia; and the Oregon Investment Council, which oversees the $60 billion Oregon Public Employees Retirement Fund, Salem.
Texas Pacific Group to go by TPG
FORT WORTH, Texas Texas Pacific Group officially changed its name to TPG, confirmed spokesman Owen Blicksilver. Its a logical evolution, given the firms global footprint, Mr. Blicksilver said. The buyout firms headquarters remains in Fort Worth, Texas.