Wednesday, 27 July 2016
Last updated 28 min ago
Jan 30 2014 | 11:24am ET
Rhode Island's main public pension fund has dropped Third Point following calls from the national teachers' union.
The State Investment Commission said it would redeem its investment from the New York-based activist hedge fund, in spite of the fact that it has earned a 49% return on its initial $50 million investment since it was made two years ago. Treasurer Gina Raimondo, who leads the commission, said that move was not political, but was based on the belief that Third Point had become too risky.
The money, which Rhode Island will get back in March, will be invested in other hedge funds, Raimondo's spokeswoman told the Providence Journal.
Last year, the American Federal of Teachers issued a list of 33 investment managers featuring individuals linked to three groups the union claims are seeking to end defined-benefit plans for teachers and other public employees. One of the groups is the Manhattan Institute, where Third Point's Dan Loeb serves as a trustee. Loeb has also backed one of the other groups, StudentsFirst, and is a supporter of charter schools, which the union opposes.
In Rhode Island, hedge funds have become a major political issue, as well. Raimondo has been attacked by her fellow Democratic candidate for governor, Providence Mayor Angel Taveras, over the state pension's $1.15 billion investment in hedge funds.
In 2012, Raimondo was honored by the Manhattan Institute for her pension reforms, which included a shift away from defined-benefit plans.