DALLAS Proxy advisory firms Institutional Shareholder Services and Glass Lewis are recommending that shareholders vote for the leveraged buyout of TXU Corp.
According to a report from ISS: If we have indeed passed the credit cycle peak, then it follows that at least some value will be irretrievably lost if TXU shareholders vote against the proposed transaction Although at certain points the implied takeover premium had declined as the companys peer set rallied, as of the date of this recommendation (Aug. 28), the offer price reflects a reasonable control premium.
Shareholders are scheduled to vote at TXUs Sept. 7 annual meeting on a buyout by an investor group lead by Kohlberg Kravis Roberts and TPG for $69.25 per share.
St. Louis issuing bonds to ease underfunding
ST. LOUIS The City of St. Louis will float at least $133 million in taxable pension obligation bonds in September to improve the funded status of its three pension systems, said Ron Smith, city operations manager. Proceeds from the bonds are expected to bring the citys $735 million police system to 87.5% funded, from 84%; $713 million employees system to 85.5% funded, from 79%; and the $460 million fire system to 104.5% funded, from 93.3%. Assets were as of October 2006, the most recent figures available. The Missouri Supreme Court ruled in March that the city is required to fully fund the police and fire pension funds and to make up for prior funding gaps.
Hawaii Employees fund starts new CIO search
HONOLULU Hawaii Employees Retirement System will re-advertise for a CIO after a recent change in state law removed the salary cap for the position, said David Shimabukuro, administrator for the $11.6 billion fund. The maximum annual salary had been $112,000, the same as the salary of Gov. Linda Lingle.
Fund officials are hoping the change will attract a wider pool of applicants, Mr. Shimabukuro said. The new search will begin at the end of August.
Former CIO Timothy Kimokeo Kimo Blaisdell left the system in January to join Robeco Investment Management.
Rogers adds annuity investment option to company DC plan
ROGERS, Conn. Rogers Corp. added an annuity investment option from Prudential Retirement to its $85 million 401(k) plan, said Jack Richie, vice president of human resources. The plan now has a total of 14 investment options. Prudential is the plans record keeper.
CalPERS apologizes for gaffe involving brochures
SACRAMENTO, Calif. CalPERS has issued a mea culpa after some 400,000 brochures mailed to retirees contained their Social Security numbers visible through the address windows of the envelopes. Some envelopes displayed full Social Security numbers and some only partial numbers, but none contained the telltale hyphens separating the sequence, said Brad Pacheco, spokesman at the $242.7 billion California Public Employees Retirement System, Sacramento. An Aug. 16 letter to retirees from CalPERS apologized for the incident and provided information about protection against identity theft.
CalPERS is conducting an internal review of the situation and has enacted a policy limiting access to confidential information within the pension fund and providing security awareness training for its employees.
Ohio Employees eyes direct lending of Treasuries
COLUMBUS, Ohio The Ohio Public Employees Retirement System, Columbus, is looking into direct lending of the funds $6.2 billion in U.S. Treasuries and $1.2 billion in agency securities. State Street is the current lending agent, but the staff and board of the $77.6 billion fund are determining whether they could substantially increase revenue by lending the securities directly, said Richard Baker, a spokesman for OPERS. Staff presented information at the Aug. 14 board of trustees meeting, but no action was taken.
Staff will now develop an implementation plan for direct lending of Treasury and agency securities, which could bring in an additional $3.82 million in 2008 and as much as $22.37 million over a five-year period, according to a memo presented to the board.
The fund already conducts direct lending of many of its equity securities.
Nashville Metro in international equity hunt
NASHVILLE, Tenn. Metropolitan Government of Nashville & Davidson County Employees Benefit Trust Fund is conducting an invitation-only search for a manager to run between $120 million and $130 million in an enhanced index international core equity portfolio, said Fadi BouSamra, chief investment officer of the $2.2 billion fund. The portfolio will probably be benchmarked to the MSCI All Country World ex-U.S index. Funding will come from reducing a $270 million international growth equity portfolio managed by Nicholas-Applegate. The fund has about $400 million in international equities, split between value and growth, and fund officials wanted to add core.
Consultant Segal Advisors is assisting. Mr. BouSamra said fund officials probably wont make a selection until next year.
Finalists chosen to run funds balanced portfolio
ERIE, Pa. Pleasant Ridge Manor Employees Pension Plan at its Aug. 16 board meeting selected Dimensional Fund Advisors, Janus and Manning & Napier as finalists in its search for a balanced manager to run an unspecified amount, according to the website of consultant Morrison Fiduciary Advisors. The board will make a selection within 30 days. The plan had about $23 million in assets at the end of 2005, the most recently information available. Neither Fiore Leone, pension board member, nor Frank Burnette, consultant at Morrison Fiduciary, returned phone calls seeking further information by press time.
More defined contribution money finding way to IRAs
CHICAGO Roughly $490 billion in 401(k) and 403(b) assets were rolled over into IRAs in 2007, up 38% from $353 billion in 2004, according to a report by Spectrem Group. The number of individuals performing IRA rollovers also has grown, up 28% to 7.4 million in 2007 from 5.8 million in 2004. In contrast, the number of individuals conducting rollovers fell to 5.89 million in 2004, down 9% from 2000.
The report also found that 67% of individuals who rolled a balance over to a personal IRA did so using a professional adviser.
The report is based on 784 surveys conducted in April and May.
Virginia Retirement investments return 20.4%
RICHMOND, Va. Virginia Retirement System, Richmond, reported a 20.4% return on investments for the fiscal year ended June 30, according to a news release. The funds benchmark return for was 18.5%. The $58 billion funds private equity portfolio posted the best return, 32%, according to the release. Domestic and international public equities returned 24.5%, followed by 23.8% for real estate and 13.5% for the funds credit programs. As of June 30, the systems asset allocation was roughly 65% public equities, 19% fixed income, 6% private equity, 5% real estate, 4% credit strategies and the remainder in cash.
Market conditions were favorable for all of our investment programs, CIO Charles W. Grant said in the release.
Wisconsin to use Russell 1000 benchmark
MADISON, Wis. State of Wisconsin Investment Board changed its benchmark for domestic large-cap equities to the Russell 1000 index. The $93.7 billion fund, which had used the Standard & Poors 500, made the change because the Russell index is more representative of the SWIB universe, said Vicki Hearing, public information officer. Strategic Investment Solutions assisted.
Foundations/endowments outperform in 2nd quarter
The median foundation and endowment plan gained 4.73% for the second quarter and 17.52% for the year ended June 30, and the median non-profit plan returned 4.64% for the quarter and 17.1% for the year, according to data from Wilshire Associates Trust Universe Comparison Service.
Public pension funds returned a median 4.23% for the second quarter and 16.08% for the year, while master trusts returned a median 4.21% for the quarter and 16.42% for the year.
Corporate pension plans returned a median 4.16% for the quarter and 16.86% for the year.
The TUCS benchmark universe includes about 1,470 plans with a combined $3.2 trillion in assets.
In a separate report from Mercer Investment Consulting, the median foundation/endowment plan in the Mellon Analytical Solutions universe gained 5.1% during the second quarter, besting the 4.5% and 4.2% advance for public and corporate plans, respectively. For the year ended June 30, the median foundation/endowment plans 18.3% gain outpaced the 17.7% return for the median public plan and the 16.8% advance by the median corporate plan.
The median large-cap growth equity manager gained 6.7% for the quarter, while the median value and the median core gained 6.6% and 6.4% for the quarter, respectively. Among small-cap managers, the median growth manager gained 8%; the median core manager, 5.8%; and the median value manager, 5.3%. The median international equity growth manager gained 7.8%; the median core manager, 7.4%; and the median value manager, 7%.
Eaton Vance assets increase by 1.6% for quarter ended July 31
BOSTON Eaton Vance had assets under management of $152.3 billion at the July 31 close of the companys fiscal third quarter, up 1.6% from the prior quarter and 27% higher than the year before. The firm reported net inflows of $4.2 billion for the quarter and $22.8 billion for the year through July 31.
In a conference call, Chairman and CEO James B. Hawkes expressed frustration that the latest quarter the best quarter weve reported since I became CEO in 1996 will likely be overshadowed by recent financial market volatility. He said net inflows for his firms retail managed accounts have more than offset net mutual fund outflows during July and August, with Eaton Vances assets under management still above $150 billion as of Aug. 15 despite the market correction.
For the latest quarter, the firms net income came to $55.8 million, up 141% from results for the prior quarter, which were depressed by marketing costs related to a record closed-end mutual fund IPO, and up 33% from the year before. Revenue for the quarter came to $286.9 million, up 10% from the prior quarter and 32% above the year before.