Welcome to the weekend, everybody. Here’s some news from the past week for your reading enjoyment:
- Dissing Hedge Funds: A managing director at the China Investment Corporation came to the biggest hedge fund conference in the world to say how crappy most hedge funds are, and that the Chinese SWF is likely going to reconsider its entire hedge fund positions. CIC’s invitation to next year’s event may be a bit slow in arriving . . .
- Department of Obvious Things I: New research shows that the private equity industry is largely focused on getting rich off of unsophisticated public pension funds. So, next time you see a picture of a fireman or a teacher in some private equity office or hear some PE professional brag about how they’ve helped to secure the pensions of millions of average americans . . . this is your appropriate response.
- Department of Obvious Things II: New research shows that asset managers often lie to people to get ahead.
- Seeding I: Oman’s State General Reserve Fund and the Oman Oil Corporation are reportedly seeding a new VC firm focused on local entrepreneurs. I’m also hearing rumors that one of Oman’s three sovereign funds has struck a deal with a prominent incubator out of Silicon Valley to help fill the pipeline of Omani deals.
- Seeding II: Silicon Valley Bank is deepening its partnership with Ireland’s Strategic Investment fund and will be doing another $100 million fund targeting Irish startups.
- A New Hope: Nigeria’s federal government has indicated that it may re-focus its new SWF, the Nigeria Sovereign Investment Authority, entirely towards domestic infrastructure projects.
- Up in Smoke: Over the course of a decade Russia will have spent $110 billion from its two sovereign funds to fill budget gaps. It had 140 billion of assets in 2010 and new predictions pinpoint $30 billion by 2020.
- Smoke’em Out: Malaysia’s biggest pension fund has plans to divest from tobacco. In my view, tobacco is one of those divestments that makes 100 percent sense to normal humans and zero percent sense to financial economists. The industry is a huge economic drain on society in terms of medical resources, lost work due to illness, lower productivity of employees and so on. So, it would seem obvious that a long-term investor wouldn’t want to support an industry that extracts rents from a system and, worse, destroys value elsewhere in a diversified, long-term portfolio. To the financial economists, however, single tobacco stocks can be attractive, which is why divesting represents a breach of fiduciary duty. To me, this implies that either fiduciary duty or finance theory is broken . . . And maybe both.
- New Role Models: The Contra Costa County Pension just empowered its CIO with delegated authority over $100 million so the Board can focus its scarce resources and time on more strategic issues than small investments. In my view, Contra Costa just made itself a role model for small and medium sized pension funds everywhere! Kudos, Tim!
Have a great weekend!
