We’re back! It’s been a crazy few weeks down on the Ave. of Giants, but I’m finally digging out. So, without further ado, here’s your weekend reading. Enjoy
- The Fee Machine I: The CIO of the New York State Common Retirement Fund noted that on a $1 billion private equity mandate, her fund might spend $30 million to $50 million in fees per year. But the employee responsible for that specific mandate? $150,000. As she rightly points out, “It doesn’t make sense.”
- The Fee Machine II: The CIO of California’s Teachers’ Retirement System said this week: “In the public markets, it costs us about one-tenth the cost to run money in-house as it does to hire an external manage . . . If we could run money in private markets and do direct deals, it would probably be 25 times cheaper.” What he forgot to mention was that the expected performance of those cheaper options is dramatically higher, too. So they’ve got that going for them, which is nice.
- The Fee Machine III: This quote on overcharging SWFs really says it all: “No one is going to f-cking notice that.” Indeed. Which is why you need to read this.
- Boycotters Gunna Boycott: After a bill calling for a pension fund to boycott boycotters was introduced, New Jersey may consider a new proposal to boycott those who boycott for boycotting . . . all of which is definitely a good use of legislators’ time.
- God’s Work I: Hey, remember that Goldman Sachs deal with Libya in which the Libyan Investment Authority lost a billion on some really bad derivatives trades? Remember that Goldman had given the chairman of said fund’s kid an internship prior to the trades being placed in 2008? Well it turns out Libya is still mad about all that.
- God’s Work II: Hey, remember that Goldman Sachs deal in which it helped 1Malaysia Development Berhad place around $9.5 billion in bonds and got paid a fee of $876 million dollars? Yeah? Well it turns out the fund was so corrupt that it is now being absorbed by the Ministry of Finance.
- Infrastructure: For a lesson on political instability screwing infrastructure investors, one would naturally turn to . . . Norway? That’s right. Norway.
- Private Equities: Sovereign funds are reportedly set to pour $300 billion into the private equity asset class in the coming years. Here’s hoping this massive deluge affords an opportunity to reset the rules with GPs and isn’t simply used by GPs to run up the score.
- What They Said: Buffett and Munger are so good at slamming the overly complex and costly finance products that they leave room for only a single word: ditto.
-New SWFs: And the next government to consider setting up a SWF is . . . Illinois.
Have a great weekend!
