Screw the $100 million bonuses, they’re going to hire some hedge fund managers by promising great health benefits and an extra week of vacation: CalPERS Hints at Starting Hedge Funds By Anastasia Donde June 2009 The $180 billion California Public Employees’ Retirement System is hinting at a bold stroke: building its own hedge funds and running them in-house. Sacramento-based CalPERS, the biggest public pension fund in the U.S., sees the move as a potential way to attract high-end talent. But given the compensation gap between money management jobs in the public sector and the private sector (where hedge fund management can be among the best-paying occupations on the planet), CalPERS administrators will need to be creative to compete.
They could just teach those postal workers who tested high on the entrance exam to be hedge fund managers instead.
How about guaranteed admissions to stanford for all of your kids, grandkids, and greatgrand kids.
LOL! This sounds like one of the stupider ideas coming out of California. I’m looking forward to doing our transaction with CAL FHFA. I’ll get a first hand look at first class incompetence.
From what I read they could save themselves a good chunk of change in mgmt fees by doing it in-house even while paying the inhouse guys a decent sum. Maybe they arent seeing that much talent out there in the HF space anymore…last year was a wakeup call to a lot of people on what a “hedge” fund is. Attracting the best and brightest, however, probably not going to happen.
Funny… You’re railing on California and you work for a bankrupt GSE!?! California’s budget will get balanced this year just as it does every year. But sadly my grandchildren will be footing the GSE bill.
Umm, I was hired onto my firm about 3 months before it went under. My division–multifamily–had its best quarter EVER where we just made $140 million for the tax payers. The GSEs are going under because of SINGLE-FAMILY mark-to-market accounting. Our ONLY affiliation with single-family is sharing the cafeteria with them. Blaming anyone in my division is like blaming a California fireman for California’s budget.
Any link to article? Makes sense to have a leveraged play. They got billions in asset as collateral so I can imagine a very low cost of borrowing. They can across trade their internal portfolios too. I wonder what sort of strategy they are going into? I can’t imagine them trying to do a multistategy since there are tons of quality funds they can invest in that might be worth it pay management and incentive fees. Given their size they should run some FI artibratage fund like LTCM.
BiPolarBoyBoston Wrote: ------------------------------------------------------- > Any link to article? > > Makes sense to have a leveraged play. They got > billions in asset as collateral so I can imagine a > very low cost of borrowing. They can across trade > their internal portfolios too. If that happens you will see a ton of short squeezes among random stocks considering they provide such a huge borrow.
BiPolarBoyBoston Wrote: ------------------------------------------------------- > Any link to article? > > Makes sense to have a leveraged play. They got > billions in asset as collateral so I can imagine a > very low cost of borrowing. They can across trade > their internal portfolios too. > > I wonder what sort of strategy they are going > into? I can’t imagine them trying to do a > multistategy since there are tons of quality funds > they can invest in that might be worth it pay > management and incentive fees. Given their size > they should run some FI artibratage fund like > LTCM. I don’t know how they can legally–or politically–pay any of the employees more than $200k per year. You can’t get the kind of talent to run a successful hedge fund for that kind of money. That’s my biggest issue with the idea.
Calpers can def pay more then 200k for top employees. But if they want to get into the really exotic strategies they just can’t compete against the large funds for personnal. They got a couple of advantages going with them… they know they’re benefit payments so they don’t have to worry about redemptions like regular asset management firms. They also don’t have to window dress their portfolio at quarter end. A huge advantage is that they got long liabilities so they can hold a 30 year bond forever if they wanted too. My bet is that they will simply be a provider of liquidity, so they can go into the more illiquid treasuries and short more liquid issues with same duration. Basically abritage across the curve.