06-18-09 © eldorado3d

    Today's Post

    What hath CalPERS Wrought? And Why? Should investors, especially institutional investors, push back (or push back harder than they have so far) against the fee structure preferred by those whom they pay to manage their money? And is the recent announcement from CalPERS such a push?

    CalPERS’ recent announcement that it will close down its hedge fund operation raises a range of obvious and not-so-obvious questions. This policy change mandates an exit from each of 24 hedge funds and six funds of funds, and in the process a re-allocation of approximately $4 billion. The first thought that came to my mind when I learned of it was: Are they unhappy about fees? Investment Beliefs The statement [click] refers to a set of Investment Beliefs that the CalPERS Board adopted a year ago. It cites two of those beliefs as particularly pertinent to this decision: that “CalPERS will take risk only where we have a strong belief we will be rewarded for it,” and that “Costs matter and need to be effectively managed.” Investors have long grumbled about the structure of fees in the hedge fund and private equity worlds. The whole notion of paying a management fee and a performance/incentive percentage strikes some as two bites of the same apple; and the way the size of the two bites stayed fixed ...

Featured Post


The Skorina Report: Another try at herding Gotham’s five-headed fund

Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced ...


One Ordinary Week in the Life of Climate Change


We thought it would be instructive to share with you links and the odd quote from recent press reports on the subject of climate change.  As a professional investor,  you no doubt want to be ahead of trends in the investment world.   Investment opportunities arise when there is a divergence of opinion, as is uniquely the case in the United States (unlike the other nations on Earth) on the subject of climate change.  The headlines of a few days tell ...

Guest Posts


The Skorina Report: Another try at herding Gotham’s five-headed fund
Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced ...


Private Equity

Key Alpha-Oriented Law Firms Merging
Yes, law firms that serve alpha hunters are consolidating. But don't take it personally, HF or PE managers. This isn't about you. It's about them. And it isn't necessarily a bad thing.

Bingham McCutchen LLP, a law firm with fourteen offices around the globe and a substantial hedge fund practice, has decided to merge with Morgan Lewis & Bockius, according to a report Reuters ran Sept. 20. Reuters’ Casey Sullivan, in attributing the merger news to “three people familiar with the matter,” said that Bingham’s managing partner Steven Browne left a voicemail message for the firm’s other partners saying that an agreement has been signed. Sullivan also said that it wasn’t “immediately clear” who knows what about this at Morgan Lewis. For those who enjoy ...

Institutional Investing

Looking at the Next Generation of Institutional Investing
Guest columnist Andrew Beer looks at the changes in institutional investing.

By Andrew Beer Institutional hedge fund investing is entering a new era. Generation one entailed investing through funds of hedge funds, which offered manager selection, access, diversification and better liquidity in an era when hedge funds were more opaque and less well understood. The crisis, however, revealed that many funds of funds were running a dangerous asset-liability mismatch as over 80% of redemptions in early 2009 came from funds of funds. Madoff and other frauds highlighted the risk of failures to adequately diligence certain strategies, which further heightened risk aversion in ...

Venture capital

Celent Reports on Equity Crowdfunding
A new report from Celent discusses the as-yet unimplemented Title III of the JOBS Act. Celent's Isabella Fonseca offers suggestions for how both wealth managers and tech providers might benefit.

Though Title III of the Jumpstart Our Business Startups Act legalized equity crowdfunding, final regulations on this point remain unissued. A recent Celent report gets granular on Title III of the Act, where this liberating language is to be found, and gets granular as well as on the proposed regulations. Title II of the JOBS Act has probably received more attention than Title III, though readers of AllAboutAlpha have heard from Jenny Kassan, one of the original petitioners whose idea led to Title III. It was Title II that lifted the general ...

Institutional Investing

The Skorina Report: Another try at herding Gotham’s five-headed fund
Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced former Governor Elliot Spitzer (known to New York Post readers ...

Partner accounting

Self-Employment Tax – Limited Partners Beware!
Guest columnist Maury Cartine looks at a new IRS memorandum on self-employment tax and how it applies to limited partners.

By Maury Cartine, CPA, JD, Partner in Charge of Alternative Investment Group Tax, Marcum, LLP The IRS released Chief Counsel Memorandum CCA 201436049 on September 5, 2014 which provides guidance on the treatment of the exemption from self-employment tax under Section 1402(a)(13) of the Internal Revenue Code for a limited partner’s share of profits. Section 1402(a)(13) exempts from self-employment tax a limited partner’s share of profits other than guaranteed payments for services described in Section 707(c) of ...

Institutional Investing

Top 5 Ramifications of CalPERS’ Hedge Fund Exodus
Guest columnist Don Steinbrugge, CFA, looks at some of the potential reactions to CalPERS' leaving hedge funds.

By Don Steinbrugge   CalPERS’ announcement to divest of hedge funds has created a significant buzz in the media with many people wondering what impact this will have on the hedge fund and pension fund industries going forward.  Agecroft Partners believes we will see the following 5 outcomes:   Continued pressure on hedge fund fees for large mandates   Although the media often comments that hedge fund fees are 2 and 20, the reality is that most large public pension funds ...

Emerging markets

Hong Kong Shariah-Compliant Launch Sells
If I should declare that I will never eat duck, and then I simply re-name certain ducks “chickens” and eat them, then people who genuinely as a matter of principle refuse to eat duck may consider me a false friend. And those who have no objection to the eating of duck may think me a silly goose.

Hong Kong launched its first ever Islamic bond September 10. The issuance was a sukuk bond which, again, is just a way of saying that it is a Shariah-compliant instrument: that is, a bond that escapes the strictures of Islamic law as understood by the authorities in this matter. For some background on what is or isn’t Shariah compliant, you might start here. There exist a range of justifications, arguments for why a particular bond is compliant. ...

Hedge Fund Strategies

Metamorphosis in HFT: Update with Brad Katsuyama of IEX, Central Figure in ‘Flash Boys’
Guest columnist and intrepid reporter Doug Friedenberg talks to Brad Katsuyama about HFT, Michael Lewis and more.

As Gregor Samsa awoke one morning from uneasy dreams he found himself transformed in his bed into a gigantic insect.  "The Metamorphosis”, by Franz Kafka. Brad Katsuyama awoke one morning in early spring, 2014, to find he had just become the object of greatly mixed opinions and emotions upon publication of Michael Lewis’s work Flash Boys.   Michael Lewis had reached out to Brad earlier in the preparation of the book, but as the book took shape, ...