Tag: New York State Common Retirement Fund

Pension Funds Team Up on Monster Beverage To Call For Board Diversity

Monster

Several public pension funds — including the massive New York State Common Retirement Fund – are calling for energy drink company Monster Beverage to increase the gender and racial diversity on its board.

Three pension funds have filed a shareholder proposal asking Monster to disclose any plans they have to increase the diversity of their board.

More from Pensions & Investments:

The $29.4 billion Connecticut Retirement Plans & Trust Funds, Hartford, $4.3 billion Philadelphia Public Employees Retirement System and Calvert Investments joined the $173.8 billion Albany-based pension fund as co-filers of the proposal.

“It’s unsettling that Monster Beverage has ignored repeated, widespread investor support for increased board diversity,” Thomas P. DiNapoli, New York state comptroller and sole trustee of the New York pension fund, said in the statement. “Company value and board diversity are linked. Businesses that rely on consumers should be particularly mindful that their boards should reflect the men and women who purchase their products. When a board fails to be responsive to its shareholders, it is often symptomatic of larger, systemic problems in the company’s governance.”

Monster directors and executives have been unresponsive to the New York pension fund’s efforts to discuss the issue, said Matt Sweeney, New York State Common spokesman, in an interview.

Monster’s response:

“Diversity is a part of the mix that Monster Beverage Corp.’s board and nominating committee consider when identifying and evaluating candidates for director. In fact, as stated in the company’s public filings, the nominating committee charter specifically includes diversity among the factors to be considered, along with experience, skills, and knowledge of business and management practices.”

The three pension funds collectively hold $57 million worth of Monster Beverage shares.

 

Photo By MrkJohn from Nottingham, England (Monster Troupe) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Private Equity Firm Allows Investors to Hire Advisor to Monitor Governance, Review Financial Records

face

A New York Times report over the weekend posed the question: is private equity becoming less private?

One private equity firm, Freeman Spogli & Company, recently revealed that it allowed investors in one of its funds to hire an outside adviser to “monitor the fund’s practices”.

Investors in the fund include several of the country’s largest pension funds, including the New York State Common Retirement Fund.

From the New York Times:

Is private equity about to get a little less private?

Perhaps so, judging by the decision of a venerable private equity firm to allow investors in one of its funds to hire an independent adviser to monitor the fund’s practices. Beyond reviewing the books and financial records at the fund, the outside adviser would also be permitted to scrutinize the fund’s governance practices for conflicts of interest, the firm said.

This shift in practice, which has not been previously reported, was disclosed to investors in June by Freeman Spogli & Company, a $4 billion private equity firm created more than 30 years ago, in a letter laced with legal jargon that obscured the import of the decision.

The new policy applied to the firm’s newest fund: FS Equity Partners VII, which opened for investment this year and has closed with $1.3 billion in committed funds. Investors in that fund include pension funds and public investments, such as the Kansas Public Employees Retirement System, the New Mexico State Investment Council and the New York State Common Retirement Fund.

[…]

Allowing the appointment of a monitor is no small matter. Giving an outsider routine access to internal fund operations is practically unknown in the $3.5 trillion private equity industry, where powerful firms operate in near secrecy and hold so much sway that many investors say they feel fortunate to be allowed to put money into the funds. The independent adviser will report to the fund’s investors.

Karl Olson is a partner at Ram, Olson, Cereghino & Kopczynski who has sued the California Public Employees’ Retirement System, known as Calpers, to force it to disclose fees paid to hedge fund, venture capital and private equity managers. He said he had never seen a provision allowing an independent monitor at a private equity fund.

“It does seem like a step in the right direction because too often the limited partners are unduly passive,” he said, referring to investors. “They should feel they are in the driver’s seat and that they have an obligation to drive a hard bargain with the funds.”Phone calls seeking comment at both the New York and Los Angeles offices of Freeman Spogli were not returned.

The NY Times report speculates that the firm may have allowed the hiring of the independent adviser after the SEC began asking questions about “several of the firm’s practices”.

New York Comptroller DiNapoli Touts Pension Reforms in Letter

Thomas P. DiNapoli

New York State Comptroller Thomas P. DiNapoli is likely to win re-election to his post without much trouble, according to recent polls.

But amidst questions about conflicts of interest in the New Jersey pension system, DiNapoli seized an opportunity to tout his own pension reform measures in a letter to the editor of the Times-Union:

A recent commentary rightfully condemned the culture of “pay to play” in which politically connected financial executives gain access to public pension money in exchange for political campaign contributions (“Public pensions, politics don’t mix,” Oct. 3).

After I was appointed state comptroller, my top priority was to restore the office’s reputation after it was badly tarnished by a scandal based on this corrupt practice. We took immediate steps to set new standards and controls to codify ethics, transparency and accountability.

In time, we have returned the office’s focus to where it should be – on the investments and performance of the New York State Common Retirement Fund. This was accomplished by: Banning the involvement of placement agents, paid intermediaries and registered lobbyists in investments; issuing an executive order and pressing the U.S. Securities and Exchange Commission to prohibit “pay-to-play” practices; and expanding vetting and approval of all investment decisions.

I’m proud to say the latest independent review of the pension fund by Funston Advisory Services found it operates with an industry-leading level of transparency and that our investment team acts within ethical and professional standards.

This review is a validation that we are on the right path and should reassure the people of New York that the pension fund is being managed properly and ethically.

DiNapoli (D) is running against political newcomer Robert Antonacci (R).

 

Photo by Awhill34 via Wikimedia Commons

Delving Deeper Into New York Fund’s Partnership With Goldman Sachs

Manhattan, New York

New York State Comptroller Thomas P. DiNapoli announced yesterday that New York’s Common Retirement Fund (CRF) plans to give $2 billion to Goldman Sachs for investing in global stocks.

The partnership is the first of its kind of the CRF. Aaron Elstein, who runs the In The Markets blog, weighed in on the partnership in a column on Wednesday:

“This innovative partnership gives the New York State Common Retirement Fund full access to world-class global equity investment opportunities and the nimbleness to take advantage of them on a timely basis,” DiNapoli said.

The innovative thing is that the pension fund hasn’t hired Goldman before. As for “access to world-class global equity investment opportunities,” it seems worth noting that mutual funds bearing the Goldman Sachs name have collectively returned 12.43% over the past five years, according to Morningstar, which is average for their category. In 2010 and 2011 the funds underperformed their category and in 2012 and 2013 outperformed. This year, their total return of 4.7% is exactly in line with the category. Maybe the global equity investment opportunities from Goldman aren’t really the ones to which you’d want special access. (A spokesman for the comptroller’s office later said Goldman can’t pitch in-house funds to the pension fund.)

Certainly the New York state pension fund will be offered investments that Goldman doesn’t make available to mutual fund customers. We know that because the press release said the pension fund and Goldman “will initially focus on dynamic manager selection opportunities in global equities to enhance returns in the Fund’s equity portfolio.” That doesn’t sound like such a bargain, either.

“Dynamic manager selection opportunities” is gibberish that in its tortured way means Goldman will introduce the pension fund to money managers who aim to outperform the market.

Elstein goes on to dissect the rest of yesterday’s press release from DiNapoli and also touches on the drawbacks of actively managing investments. Read the whole column here.

New York Common Fund Gives $2 Billion to Goldman Sachs

Manhattan, New York

The New York State Common Retirement Fund announced today it plans to give $2 billion to Goldman Sachs Asset Management to invest in global equities.

Reported by Bloomberg:

It’s the first time the $180.7 billion fund has formed such a partnership, Comptroller Thomas DiNapoli, the pension’s sole trustee, said today in a statement. In addition to investing the funds with equity managers, the unit of Goldman Sachs Group Inc. (GS) will also provide advice across the pension’s remaining $98 billion equity portfolio.

“Identifying new opportunities is key to the continued growth of the fund’s long-term value,” DiNapoli said. It will give the pension “full access to world-class global equity investment opportunities and the nimbleness to take advantage of them on a timely basis.”

New York joins public pension funds including New Jersey, New York City and the Teacher Retirement System of Texas in making big allocations of capital to investment managers that can be deployed more quickly and across different strategies. Such separately managed accounts offer cheaper fees and more control for investors, who in turn agree to commit large sums for a decade or more.

[…]

Timothy O’Neill and Eric Lane, global co-heads of the investment management division at Goldman Sachs, said the partnership is a “landmark assignment” for the firm.

“We are excited to provide customized access to our broad open-architecture platform, due diligence expertise and portfolio construction capabilities,” they said jointly in the e-mailed statement from DiNapoli.

Thomas DiNapoli is New York State’s Comptroller, but he is also the sole trustee of the New York State Common Retirement Fund.