Gary Bland, former state investment officer for the $14.1 billion New Mexico State Investment Council, Santa Fe, had a penchant for using small money managers that goes back to his earlier days as vice president-trust investments at Boeing Co.
Some of those managers recently terminated by the council had Mr. Bland and the New Mexico council to thank for almost all of their assets under management.
On May 25, three of the managers hired by Mr. Bland were terminated mainly for performance, but also because of what Charles Wollmann, council spokesman, called “concentration risk,” meaning New Mexico accounted for most of the firms' assets under management.
The terminations followed a reassessment of the council's money manager stable because a state law enacted this year shifts responsibility to hire and fire investment managers to the council from the state investment office. Also under the new law, the state investment officer no longer is a voting member of the council.
Terminated were Simms Capital Management Inc., Stamford, Conn.; Beekman Capital Management Ltd., Santa Fe; and Carret Asset Management LLC, New York.
The $395 million Simms managed in two strategies — $242 million in domestic large-cap growth and $153 million in international developed markets — amounted to 84% of Simms' AUM.
The $362 million in domestic smidcap growth equities Beekman managed for the council accounted for 97% of the firm's AUM.
Carret's $256 million in domestic large-cap core assets from the system accounted for 15% of the firm's total assets under management, Mr. Wollmann said.
The council does not have an emerging manager program, he added.
The three managers were hired as part of a sweep of the system's equity managers seven years ago. Mr. Bland launched requests for proposals to manage the council's $7 billion equity portfolio with the primary selection criteria being whether the manager would agree to charge 25 basis points or less.
Seven new active equity managers — many of them small — were hired to replace all but a couple of the existing equity managers.