In the above video, we get to hear the Chief Investment Officer of CalSTRS, Christopher Ailman, weigh in on CalPERS’ decision to divest from hedge funds. The gist: CalPERS did what was right for them, but CalSTRS is sticking with hedge funds.
“CalPERS’ decision does not change our mind or our opinion,” Ailman said during the interview.
CalSTRS, based in Sacramento, California, pledged $200 million to Legion in February and took a 30 percent minority stake, investment officer Philip Larrieu, who oversees the pension’s allocations to activist managers, said in an interview last week at the SkyBridge Alternatives Conference in Las Vegas.
The pension system, which has about $4.6 billion with activist managers including Trian Fund Management LP and Relational Investors LLC, is weighing additional investments in the strategy, especially in managers such as Legion that invest in small- and mid-cap companies. Activist investors take stakes in companies and then push for changes aimed at increasing value.
The pension system will consider additional seed investments for the ability to take minority stakes in funds and early allocations for concessions on fees, according to Larrieu. CalSTRS’ other activists include Blue Harbor Group LP, New Mountain Capital LLC, Starboard Value LP, Cartica Capital LLC and Knight Vinke. CalSTRS commits a minimum of about $100 million to each fund and prefers to be the sole investor in a pool, also known as a fund-of-one structure, Larrieu said.