News

By Deirdre Brennan 

Massachusetts Secretary of State William Galvin has state pension fund managers and advisors scratching their heads over comments he made last week in which he blasted hedge funds and their use in pension funds. Galvin said that he feels the $40 billion Massachusetts Pension Reserves Investment Management board has invested too much in hedge funds, which he views as high-risk investments.   

MassPRIM, which is chaired by Massachusetts Treasury Secretary Tim Cahill, currently invests 5% of its portfolio in six fund-of-hedge funds and plans to double the amount invested in the vehicles to $4 billion by year-end.   

"I think [Galvin] is looking at it from an individual investor's point of view," said Cahill, who is a strong supporter of the plan having exposure to hedge funds. He added, "He is looking at the blowups."   

Signal Capital Management has just launched its first hedge fund, a multi-strategy fund that will make private investments in public equities (PIPEs). The firm is also doubling its staff in anticipation of adding three more products to its line-up later this year.
 
Shane Rodgers, chairman and ceo, said the Signal Special Opportunities Fund will take a longer-term, private equity approach to investing, holding its positions in PIPEs for 6-12 months. The firm will also invest in private companies that are close to going public, and will hold these positions for a slightly longer timeframe, 12-18 months.   

The $80 billion New Jersey Division of Investment has hired two private equity and two real estate managers to handle a total of $600 million.

The plan will invest $150 million in MDCP V, a large and mid-market buyout and growth equity fund, and $300 million in Texas Pacific Group Partners V, a complex large buyout fund, according to Spokesman Tom Vincz. 

The $13 billion City of Los Angeles Fire and Police Pension System has issued an RFI for an alternative investment  consultant.

According to the RFI, candidates must have provided alternative investment consultant services to at least three public pension plans, one of which has had at least $5 billion in assets --$500 million of which have been in alternative investments-- for a minimum of three years as of Dec. 31, 2005.

MHW Capital Management has recently launched a long-only hedge fund that invests in public companies undergoing major changes.

“We like to be large holders of the companies we invest in and work directly with managements and boards to make sure that their turnaround strategy is the right one,” said Peter Woodward, founder and general partner of the firm.

Iron Horse Capital Advisors is gearing up to launch its first hedge fund, a long/short fund-of-funds, on May 1, and is not charging a performance fee. Instead, the Texas-based firm will charge a flat, 1% fee for management, and is able to do so because the firm has negotiated discounted fees with the underlying managers, according to Melanie Hutson-Bittone, head of marketing for the firm.

By Deirdre Brennan 

Albania is a long way from California, but the journey that Victor Dosti has taken to get to where he is now—a successful portfolio manager for a $40 million hedge fund in Los Angeles—has been far longer and more complex than the 6,000 miles that separate the struggling European nation and the thriving U.S. state.

The $66.9 billion Washington State Investment Board has hired four private equity managers to handle a total of $1.375 billion. 

Liz Mendizabal, spokeswoman, said the plan will invest up to $250 million in Fortress Investment Fund IV, $200 million in Blackstone Capital Partners V, $750 million in TPG Partners V and $175 million in Madison Dearborn Capital Partners V. Fortress’ fund makes control-oriented investments in asset-based businesses, and the investment is the board’s fourth with the group. Blackstone’s fund is a buyout fund and it is the board’s first investment with the firm. TGP’s fund is a mega buyout fund and it is the third TGP fund the board has invested with. Finally, Madison Dearborn’s fund is a buyout fund focused on large corporate restructuring, and it is the third Madison Dearborn fund in which the board has invested. 

The Pennsylvania State Employees’ Retirement System has committed $227 million to new investments and $155 million in follow-on commitments.

At a board meeting held earlier this week, the fund approved real estate investments of up to $75 million in the Scout Fund I, $25 million in Prudential Latin America Retail Fund, private equity investments of $25 million in Excelsior Capital Asia Partners III, $10 million in Sigulare Guff BRIC Opportunities Fund, €35 million ($42 million) in Chequers Capital XV and $50 million in Centerbridge Capital Partners. Follow-on commitments were approved of $30 million to Francisco Partners II, $25 million in Worldview Technology Partners V and $100 million to Bain Capital Fund IX.

The $7 billion San Diego County Employees Retirement Association has terminated Numeric Investors from an $80 million quantitative long/short market control portfolio.

David Deutsch, cio, said the firm was terminated for people, process and performance issues and had been monitored for the past year after there was personnel turnover in the portfolio’s management team. He said the plan will hire a firm from the group of finalists that were involved in a search about a year ago, though he said he was not prepared to discuss the firms at this time.