A highly contentious race for a seat on the board of the $21.2 billion San Francisco City & County Employees' Retirement System resulted in the defeat of incumbent Herb Meiberger, who had stridently opposed the retirement system's expansion into hedge fund investments.
Retired San Francisco Police Capt. Al Casciato captured 62% of the vote, with 9,871 ballots cast in his favor. Mr. Meiberger's received 38% or 6,137 of the votes, showed final results from the San Francisco Department of Elections.
Mr. Meiberger, who has served almost 25 years on the retirement systems board, had made his opposition to hedge funds a prime campaign theme, warning that they were too risky and could cause major financial losses. He maintained that the election of Mr. Casciato, who had previously served on the board but stepped down in 2012, would result in the retirement system expanding beyond its initial $1 billion commitment into hedge funds.
Mr. Casciato insisted he was not for or against hedge funds but would judge each investment on its own merits. But Mr. Casciato's political advertisements, which were run on Facebook and YouTube in social media savvy San Francisco, cast Mr. Meiberger as an “obstructionist” who was costing the retirement system millions of dollars in investment gains because of his “no” votes on potential investments.
Mr. Meiberger, a retired securities analyst for the retirement system, said the ads were false and that he was doing his job acting as a fiduciary in vetting investments. In his own YouTube video, Mr. Meiberger played up his opposition to hedge funds.
“I have seen San Francisco shift from a community where people help each other into being a playground for the rich,” Mr. Meiberger said in the video. “Billionaire hedge fund managers are making money off your backs.”
The campaign was unique because contests for unpaid spots on public retirement boards rarely involve public debates on investments.
Mr. Meiberger was not the only board members who has issues with Chief Investment Officer William Coaker Jr.'s hedge fund investment plan, which was formally unveiled in May 2014. Most board members were opposed to the proposed 15% allocation of the system's assets.
But Mr. Meiberger cast the sole dissenting vote when a scaled-down version of the plan was approved in February 2015 that called for investing 5% of system assets in hedge funds.
In an email to Pensions & Investments following his defeat, Mr. Meiberger did not mention the system's hedge fund program. Instead he focused on the system's $3 billion private equity portfolio. “I am proud of investing in private equity in its formative years and growing the commitments prudently over time,” he said. “San Francisco has one of the best funded pension plans in California, and its members and taxpayers should appreciate the hard work and collaborative efforts of the board and staff.”
The system is 83% funded based on its market value of assets.
Mr. Casciato, in his own email to supporters, said he was “looking forward to working collaboratively with all, including the media.”