November 26, 2009
The WSJ is reporting that CalPERS is considering dropping Blackrock as an investment advisor to the pension fund after a disastrous year. Amongst the investments Blackrock steered CalPERS into was the Stuyvesant Town/Peter Cooper Village deal in NY. That deal has very likely cost CalPERS all of its investment of $500M.
But of course, what did you expect when you throw money at a fee based model? The WSJ is reporting that Blackrock received some $12M+ from CalPERS last year alone.
Of course, there are other indications that Blackrock wasn’t to blame, but it was CalPERS. Just look at this beauty of a quote in the article:
As part of its real-estate review, Calpers has asked some its better-performing real-estate partners to analyze the assets underperformers, people familiar with the process said.
For example, Stockbridge Real Estate Funds was “was used as an independent consultant” to review MacFarlane, said Mr. Pacheco, the Calpers spokesman. After MacFarlane resigned as a Calpers adviser, Stockbridge took on MacFarlane’s business on an interim basis. Stockbridge declined to comment.
This is crazy. CalPERS tasks Stockbridge with the evaluation of MacFarlane, and then after the report likely doesn’t come up good, CalPERS fires MacFarlane and fill the vacuum with Stockbridge.
CalPERS should boot the firms which made crazy investments on its behalf, but heads should also roll at CalPERS for throwing money at these crazy investments. A pension fund investing in deals premised upon the ability to circumvent rent controls (think Stuy Town and East Palo Alto) is just nuts.
- CalPERS Takes Huge Hit to RE Portfolio
- Tishman Walks on Stuy Town
- Stockbridge Seeking Deal To Takeover Fund That Acquired Peery/Arrillaga Portfolio
- MacFarlane Quits CalPERS; Stockbridge In
- RREEF America III Overview