February 12, 2009

Forbes says Stockton is “America’s Most Miserable City”

Forbes has called the Central California city of Stockton, “America’s Most Miserable City” in a ranking of the 150 largest metropolitan areas in the U.S:

Stockton ranks in the bottom seven in four of the nine categories we looked at: commute times, income tax rates, unemployment and violent crime. Only New York City has a higher income tax rate than what Stockton, and all California residents, are forced to pay.  Stockton was ground zero for the housing boom and now the subsequent bust. Home prices more than tripled between 1998 and 2005 and then came crashing down last year. Stockton had the country’s highest foreclosure rate last year at 9.5%, according to RealtyTrac, an online marketer of foreclosed property. Things are not looking much brighter in 2009 as housing prices are expected to fall another 36% on the heels of a 39% drop in 2008. Also, unemployment is expected to jump to 13.3% from 10.4%, according to economic research firm Moody’s Economy.com.

Stockton’s Mayor Ann Johnson, however, sounds like she is making a sincere attempt at leadership:

“We are engaging the entire community and encouraging everyone to get involved and help us find solutions that meet the needs of our community,” says Stockton Mayor Ann Johnston. “Volunteerism is encouraged, looking out for your neighbor, and taking personal responsibility where individuals can make a difference. We are partnering with all community organizations–schools, churches, non-profits– to provide support services and help individuals and families get through these difficult times.”

Filed under California Economy, Central Valley by

Tesla seeking $350 million loan from Federal Government

Tesla Motors Inc. said it has not been notified yet whether it will get a $350-million loan from the federal government, but expects word within four to five months.  A newsletter distributed Wednesday by the company caused confusion when CEO Elon Musk wrote, “I am excited to report that the Department of Energy informed Tesla last week that they expect to disburse funds … within four to five months.” Some took that to mean that the loan had been approved but the company said later that this isn’t the case.  Spokesperson Rachel Konrad said the Department of Energy hasn’t given final confirmation to any of the 75 entities that applied for the funds. “No one has gotten final confirmation,” she said. “That said, we’re very confident we’re going to get financing.”  Full story here.

Filed under Manufacturing, U.S. Government by

February 11, 2009

Senator Yee Blasts UC for Latest Executive Pay Scandal

University of California President Mark G. Yudof apparently hasn’t been able to do much to curtail the culture of corruption that has gripped the UC since a series of outrageous scandals during his predecessor’s tenure. It has now been reported that another highly paid executive just left the UC’s Oakland office with a $100,000 severance check, then turned around and got a job down the street at their Berkeley Office for the same $200,400 salary. The executive aid who commands this high salary is Linda Morris Williams.  She had previously been awarded a $44,000 relocation allowance and a low-interest $832,500 home loan by then-UC President Robert Dynes. State Senator Leland Yee condemned the University of California in a opt-ed he wrote on Califoria Progress Report:

Clearly, there is a broken record at the UC. How many more scandals, oversight hearings, and new laws do we need to have before the University will finally clean up their act? It is truly unconscionable that they continue to mislead the taxpayers and students… There is absolutely no justification for these bloated salaries. The UC administration continuously violates the public trust by catering to the University’s elite rather than serving the students, faculty, and workers they are appointed to represent. The public deserves better from the UC administration.

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February 3, 2009

California now lowest credit rating in the United States

California has the lowest credit rating in the country after Standard & Poor’s cut its general obligation bonds one grade because of a record budget deficit, according to a report in the San Jose Business Journal we are now in worse shape then even hurricane ravaged Louisiana:

New York-based S&P said Tuesday it lowered the state’s $46 billion of full-faith-and-credit debt to A from A plus. The move bumps California down; it was previously tied with Louisiana. Gabriel Petek of S&P’s San Francisco office said the lowered rating “reflects our view of the state’s inability to reach an agreement on a mid-year budget revision and its rapidly eroding cash position.” California has had to delay $3.7 billion in some payments — including income tax refunds — because of the budget impasse.

Filed under California Economy, California Government, z9-Uncategorized by

Wells Fargo planning lavish Las Vegas casino junkets

Wells Fargo & Co., which received $25 billion in taxpayer bailout money, is planning a series of corporate junkets to Las Vegas casinos this month, according to a report by AP and the San Francisco Chronicle. They have justified this by saying it is part of culture”. They won’t tell anyone what they did with our $25 billion, but as far as we know, they are still not using this money to help American companies:

Wells Fargo, once among the nation’s top writers of subprime mortgages, has booked 12 nights at the Wynn Las Vegas and its sister hotel, the Encore Las Vegas beginning Friday, said Wynn spokeswoman Michelle Loosbrock. The hotels will host the annual conference for company’s top mortgage officers.

The conference is a Wells Fargo tradition. Previous years have included all-expense-paid helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 employees and guests.

“I was amazed with just how lavish it was,” said Debra Rickard, a former Wells Fargo mortgage employee from Colorado who attended the events regularly until she left the company in 2004. “We stayed in top hotels, the entertainment was just unbelievable, and there were awards — you got plaques or trophies.”

While the nation’s recession has led other banks, such as Bank of America, to cancel employee recognition outings, Wells Fargo has not.  “Recognition events are still part of our culture,” spokeswoman Melissa Murray said. “It’s really important that our team members are still valued and recognized.”

Corporate retreats have attracted criticism since the bank bailout last fall. Congress scolded insurance giant American International Group Inc. for spending $440,000 on spa treatments for executives just days after the company took $85 billion from taxpayers.  AIG has since canceled all such outings.

Beginning Feb. 25, Wells Fargo’s insurance division is hosting a 40-person team meeting at the Mandalay Bay Hotel in Las Vegas, according to the Las Vegas Convention and Visitors Authority.  Murray did not immediately have details about the size or cost of the events or what was planned….

Rooms at the Wynn and the Encore are consistently among the most expensive in Las Vegas. The $2.3 billion Encore opened in December as sister hotel to the Wynn. Its decor includes a 27-foot Asian dragon made from 90,000 Swarovski crystals and artwork by Colombian artist Fernando Botero. One of the restaurants features Frank Sinatra’s 1953 Oscar.  Both properties have high-end retail stores, including Manolo Blahnik at Wynn and Chanel at Encore.

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NASA and Google will form Singularity University at Moffett Field

A technology-focused school called Singularity University will open on the Moffett Field campus of the National Aeronautics and Space Administration this summer, the San Jose Business Journal has reported. 
The Mountain View school will focus on coordinating the latest advances in a number of fields to help solve problems such as global warning and energy needs along with famine and disease.  The school’s chancellor is Ray Kurzweil who wrote “The Singularity Is Near” in 2005.  The first session will be limited to 30 students but will then expand to 120 in the following year, the school said. In addition Singularity University plans to offer three-day and 10-day programs.  Peter Diamandis, CEO of the X Prize Foundation — which gives $10 million awards for scientific breakthroughs — will be vice chancellor and trustee. Executive director will be former Yahoo Inc. executive Salim Ismail.

Filed under Education and Training, Information Technology by

January 27, 2009

State unemployment skyrockets, 152,000 jobs lost in the last two months

The State Employment Development Department announced that California lost 78,200 jobs in December and the unemployment rate is now 9.3 percent – the highest rate since 1993. About 1.7 million Californians were looking for work last month — up by 166,000 since November and up 653,000 since December 2007.  Some 785,200 were laid off, while 125,300 chose to leave their job. The rest were either temporarily employed or new job seekers.  he construction sector accounted for the most job cuts over the past year- 92,600 positions, a 10.8 percent annual drop. The latest job figures followed a revised loss of 73,500 payroll jobs in November. That means California has lost nearly 152,000 jobs in the last two months.

Filed under California Economy by

January 26, 2009

California prepares to stop paying bills

The state of California has run out of money.  Facing a $42 billion budget deficit, State Controller John Chiang told the Sacramento Bee he has already borrowed $21.5 billion to try to cover the state’s checks, but by Feb. 1, there will be no more options left but to simply stop paying some of the bills – including tax refunds, welfare checks, student grants and other payments owned to California citizens.  “It pains me to pull this trigger,” Chiang said at a news conference. “But it is an action that is critically necessary.”  Federal law requires that many school and healthcare programs – a total of about $6.6 billion in California so Chiang has announced an expected payment freeze on $3.7 billion worth of the state’s bills, most of it refunds owed to taxpayers.   Even with the freeze beginning next week, the Los Angeles Times reports, California will still fall $346 million short for the month of February, forcing Chiang to consider issuing IOUs – something only done once since the Great Depression.

Filed under California Economy, California Government by

January 22, 2009

California in State of Undeclared Bankruptcy

California is in a state of “undeclared bankruptcy,” Assemblywoman Diane Harkey said after Gov. Arnold Schwarzenegger delivered a truncated State of the State address:

“I will not give the traditional State of the State address here today because the reality is that our state is incapacitated until we solve the budget crisis. The truth is that California is in a state of emergency,” Schwarzenegger told a joint session of the legislature on January 15.

Harkey said she was happy to hear the governor’s blunt words, delivered in just a 12-minute speech. “I am encouraged by the governor’s commitment to find a bipartisan solution to our budget crisis,” said Harkey (R-Dana Point). “We must have the political courage to implement real changes to our state’s debt financing practices. Living within our means and establishing reserve requirements just like we did when I was mayor of Dana Point should not be foreign concepts to lawmakers. These fundamentals are essential to turning around California’s ‘undeclared bankruptcy’ as we
can no longer borrow.”

Filed under California Government by

January 20, 2009

Stanford announces $100 million energy institute

Stanford University has received $100 million to create a new energy institute where scholars can study everything from solar cells to energy markets and economics, according to a report in Mercury News:

The institute will expand Stanford’s role in energy research and national energy policy. It will consolidate Stanford’s existing energy-focused efforts onto one site — and allow the hiring of new faculty, support additional graduate students and offer seed money for major research projects
The donations came from three alumni who said they were motivated by the desire to protect the environment from greenhouse gases, improve energy efficiency and reduce America’s dependence on foreign oil.  Oil and gas executive Jay Precourt donated $50 million to create what will be called the Precourt Institute for Energy. Farallon Capital Management partner Thomas Steyer and his wife, Kat Taylor, gave $40 million to create a new research center within that institute, the TomKat Center for Sustainable Energy. The final $10 million came from other donors.

“These generous gifts will help us overcome the enormous challenges that we are facing in energy research,” Stanford President John Hennessy said at a Monday news conference. “It will create an independent institute for researchers on campus and around the world.” The new institute will be directed Lynn Orr, professor of energy resources engineering and director of Stanford’s Global Climate and Energy Project. He plans to pull together 136 faculty members in 21 departments to create interdisciplinary projects. Other recent gifts from alumni include a $75 million pledge in 2007 by Jerry Yang, co-founder and a director of the Internet search engine Yahoo and his wife, Akiko Yamazaki. Of that, $50 million was used to build the Environment and Energy Building, which will house the new Precourt Institute for Energy. In 2006, Stanford University trustee Ward Woods and his wife, Priscilla, committed $30 million for what is now named the Woods Institute for the Environment. The energy institute will work in tandem with Woods’ environmental researchers; the two are in the same building.

Filed under Education and Training, Energy Industry by

January 15, 2009

HP CEO Scores with $42 million salary prior to massive layoffs

Is this another example of our corporate leaders being rewarded for short term gain rather than long term vision?

Hewlett-Packard Co. CEO Mark Hurd received about $42.5 million in pay during 2008, according to a regulatory filing. The Palo Alto-based personal computer maker said in a filing with the U.S. Securities and Exchange Commission Tuesday that it gave Hurd a $5.3 million bonus along with $12.9 million in stock awards, $18.6 million in incentive plan compensation and $4.2 million in option awards, pension and expense payments. His base salary was $1.5 million.  Hurd took the reins in April 2005 and began a revamp of the company. In September HP said it would take a $1.7 billion charge and cut 24,600 jobs.

Filed under Manufacturing, z9-Uncategorized by

January 7, 2009

Severe retail downturn forecast for 2009

As reported in the San Francisco Chronicle, the retail industry in California is in for some very difficult times:

After years of aggressive expansion fueled by easy debt and plastic-wielding customers, the industry is in for a major correction in 2009, analysts predict. The shift could recast much of the Bay Area retail landscape, blighting shop-lined streets with boarded storefronts, clearing out shopping centers and doing in struggling malls.
After one of their worst holiday seasons in decades, few retailers are in expansion mode and few banks are eager to hand stores cash, so much of the space is likely to sit empty for the foreseeable future. That will place considerable pressure on landlords – especially those who bought or developed buildings near the top of the market.
More on Severe retail downturn forecast for 2009

Filed under California Economy by

UCSF wins grant to address health worker shortage in Tanzania

The University of California, San Francisco has won a $7.5 million grant from the Bill & Melinda Gates Foundation to help address the shortage of health-care workers in Tanzania, in East Africa. As reported in San Francisco Business Times, The two-year grant will support a collaboration between UCSF Global Health Sciences and Tanzania’s Muhimbili University of Health Allied Sciences, that nation’s only public university of health sciences, to develop and implement strategies for Dar es Salaam-based Muhimbili and other African institutions to meet their countries’ health workforce needs.

Solving sub-Saharan Africa’s health-care worker shortage has long been a priority for governments, universities and international organizations, according to the two universities, who say Tanzania’s leaders recognize the need to educate and train more health-care workers. The partnership aims to develop an “institutional partnership model” that can be replicated in other low-resource settings.

In early December, UCSF announced a $4 million grant from the Gates Foundation to support planning for a potential systemwide UC School of Global Health. The proposed school, which the university envisions as training new leaders to help tackle global health issues, would be UC’s first multicampus, systemwide school, the university said.

Filed under Education and Training, Health and Medical by

San Francisco Federal Reserve names new Chairman and Deputy

The Federal Reserve Bank of San Francisco has named T. Gary Rogers as new chairman and Doug Shorenstein was named deputy chairman. Rogers is chairman of Levi Strauss & Co. and is the immediate past chairman of Dreyer’s Grand Ice Cream Inc. Rogers also sits on the boards of the Shorenstein Properties, Stanislaus Food Products, and the UCSF Foundation. Shorenstein is chairman and chief executive officer of Shorenstein Properties. He joined the family business in 1983 and became chairman and CEO in 1995. The Federal Reserve Bank of San Francisco provides wholesale banking services to financial institutions throughout the nine western states.

Filed under Banking and Financial Services by

January 6, 2009

More Californians asking for public assistance

As the California economy continues to deteriorate, low- and middle-income Californians are finding it increasingly difficult to make ends meet, according to a report released Monday by the nonpartisan California Budget Project.

They are turning to public programs in growing numbers — at a time when state policymakers have proposed deep cuts to health and human services programs to close the state budget gap. The number of food stamp applications jumped 33 percent between September 2007 and 2008, but rising food prices mean the assistance doesn’t go far enough. The number of families on welfare cash assistance grew by almost 27,000 over the same period.
A Democratic budget proposal would suspend a cost-of-living increase for cash assistance for welfare recipients to save $100 million. A Republican counter proposal would cut the COLA, limit eligibility for assistance and cut cash grants by 10 percent, for a savings of $1 billion.

“We are at a time of extraordinary stress not only on our (state) budget, but on California families,” project director Jean Ross said in a press call reported by the San Jose Business Journal. Not only are more individuals and families applying for assistance, a “very different type of family” historically a couple of steps up the income ladder is asking for help because of rising food costs and rising unemployment, she said. The current budget proposals will put more families at risk, Ross said. “Every dollar that doesn’t go to a family doesn’t go out into the local economy.”

Filed under California Economy, California Government by

AsiaWeek to cease publication

As reported in New American Media, San Francisco-based AsiaWeek has stopped publication after nearly three decades of service.

AsianWeek is just the latest in a string of Asian-American media closures, including KQED’s Pacific Time, AZN Television, and the San Jose Mercury News’ Vietnamese-language supplement Viet Mercury. While most cities have trouble supporting one daily newspaper, he said, San Francisco has five Chinese-language dailies, offering not only local and national news, but a dozen pages of international coverage of news from Taiwan, mainland China, Hong Kong, and Southeast Asia.  But just as the mainstream media are being hobbled by declining readership and revenue, hastened by a faltering economy and growth of online media, their ethnic media counterparts are being squeezed too. “There are fewer major newspapers, fewer newspaper readers and fewer newspaper advertisers than ever before,” wrote AsianWeek President
James Fang, and Ted Fang, editor and publisher, in a letter to readers published in the newspaper. In the last few months, a handful of ethnic publications has gone the way of AsianWeek, scrapping paper editions and going online, reaching out to readers for help or pulling the plug completely.
Ted Fang said AsianWeek would continue publishing online and in special newspaper editions. He said, however, that all staff had been laid off. Fang said AsianWeek plans to do more community work, which Fang counted among the newspaper’s greatest “successes.” “Media is a part of bringing together APA communities,” he said. “We plan to organize around events… around issues and causes as a way of helping the community.”

Filed under Asia, Media and Entertainment by

December 12, 2008

Dismal forecast for California’s economy

The UCLA Anderson Forecast, an economic think tank, has issues a bleak forecast for the California economy. The only consolation, the Anderson Forecast is often wrong, but if they are right this time there could be some very difficult times ahead – as the forecast says: “There are no bright spots on the horizon”. As reported in the San Francisco Chronicle: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/11/BUAP14LM9N.DTL

The recession that has already devastated the Central Valley has started to hurt the Bay Area, causing job losses that will continue through 2009 when the economy should begin a slow and weak recovery, according to a bleak forecast issued today.

“There is no suggestion in the data that we are near that bottom,” was the somber message of the UCLA Anderson Forecast, a quarterly look at the state economy conducted by the university’s business school.

It was with some humility that UCLA economists issued this report, predicting high unemployment through 2010 as the state gradually recovers from the housing bubble. In recent quarterly forecasts they had suggested the state might dodge the recession. But forecast Director Edward Leamer said the financial crisis that erupted in September and October had “unleashed a tidal wave of fear” that caused spending and investment to collapse, confounding all the forecast’s expectations.

“When you do forecasting you look at historical trends and try to project how they might play out,” Leamer said. “But nothing such as this has ever happened. Everybody is relying on hunches.” Now the forecast projects that California will continue in recession until the third quarter of 2009 when economic growth is expected to slowly resume and pick up steam throughout 2010.

The forecast projects that the statewide unemployment rate, currently 8.2 percent, could approach 9 percent next year and stay near that level for some time. Even after output and sales begin to recover late in 2009, the forecast does not anticipate the job market to rebound quickly. Unfortunately, 2009 will be a year of job losses and in 2010 payrolls will be flat,” said UCLA Anderson economist Jerry Nickelsburg.

As Nickelsburg explained, employers now use temporary and contract labor to handle the uptick in sales that signals the end of a recession. This has given rise to what is called a jobless recovery and California should expect that pattern with this downturn.

Nickelsburg said the recession has struck different parts of the state with varying severity. “The inland areas have been hardest hit by the housing downturn and are being hardest hit by the pullback of the retail and the wholesale sectors,” he said. “Here you’re talking about areas of the East Bay and the Central Valley.”

The trade, tech and tourism economies of Los Angeles, Silicon Valley and San Francisco have been less affected so far but will be dragged down by what is now recognized as a global recession. “Imports flowing through U.S. ports will continue to decline, and recessions in Europe and Japan mean the export demand for California manufacturing will be muted,” the forecast says.

Tourism, so important to San Francisco, is also being undercut by the global recession. “Foreign tourism to California will diminish in the 4th quarter and is not expected to come back before next summer,” says the forecast, predicting job losses in the hospitality sector “to continue into 2010.”

Filed under California Economy by

November 25, 2008

1.5 million Californians out of work

California now has more that 1.5 million unemployed nearly a third of whom have lost their jobs in the last year. The State’s unemployment rate jumped to 8.2 percent in October, the highest rate in 14 years. This is the third-highest unemployment rate in the nation after Michigan and Rhode Island, which were both have rates of 9.3 percent. The largest hit came in the construction industry, which has lost 65,900 jobs in the last year, followed by manufacturing. Between October 2007 and October 2008, the state lost 101,300 jobs, including 24,600 in the past month alone. The State Employment Development Department said its monthly survey found 527,918 people were receiving unemployment checks in October.

This bad news came just as a state fund that pays these unemployment benefits was about to run out of money and is on the brink of insolvency. The state’s unemployment insurance fund is expected to have a deficit of $2.4 billion at the end of 2009, forcing it to borrow from the federal government for only the second time since the program was established in the 1930s. If no steps are taken to increase the fund’s revenue or reduce its payouts, its deficit is projected to hit $4.9 billion by the end of 2010.

Governor Schwarzenegger has proposed filling this gap by raising the payments from employers into the fund and by reducing benefit levels for unemployed workers and raising income eligibility requirements. He has not been able to reach agreement with the State Legislature on this approach, as they struggle to address California’s now-$11.2 billion budget deficit.

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November 24, 2008

California announces electric car network partnership

California and Bay Area Officials have announced plans for a $1 billion network of electric car recharging stations for the San Francisco Bay area highways with a goal of greatly expand the number of electric vehicles on the road. A private company – Palo Alto-based “Better Place” along with San Francisco Mayor Gavin Newsom, Oakland Mayor Ron Dellums and San Jose Mayor Chuck Reed announced the deal, which sets out to install charging stations in homes, businesses, parking lots and government buildings by 2012. The company said it will also build mechanized battery swapping centers where robots will remove and replace the batteries in cars that are compatible with the system. These stations will allow electric car drivers to travel longer distances without recharging.

The initiative would make the Bay Area the first region in the U.S. to create an electric car network.
Gov. Arnold Schwarzenegger on Thursday supported the deal, which the company hopes to someday take statewide. “This type of public-private partnership is exactly what I envisioned when we created the first-ever low carbon fuel standard and when the state enacted the zero emissions vehicle program,” Schwarzenegger said in statement. “This partnership is proof that by working together, we can achieve our goals of creating a healthier planet while boosting our economy at the same time.”

The company also unveiled a prototype electric Nissan Rogue SUV, the second prototype developed
under Better Place’s partnership with automakers. Better Place has already struck similar deals with Israel, Denmark and Australia to create electric vehicle infrastructure in those countries.

“We put in the infrastructure, and the big carmakers make the electric cars for us,” said Joe Paluska, the company’s head of policy and communications. “This is an opportunity for California to apply its strength in technology and innovation to Michigan’s manufacturing might,” he said. “We now
need a strong national policy set by the new administration to help the U.S. revive its auto industry and it’s economy.” Until now, the knock on most electric vehicles is that they were prohibitively
expensive because the batteries cost $10,000 or more. Paluska said the new prototype vehicles solve that problem — the replaceable batteries in the prototype cars would be owned by the company, not the consumer. Better Place would charge drivers a subscription fee to use its recharging facilities.

As their part of the deal, the mayors vowed to help streamline local permitting and regulations to hasten the installation of hookups in the region, and to provide incentives for local businesses to install charging outlets for employees. “Our goal is to make the Bay Area — and eventually California — the electric-vehicle capital of the world,” Newsom said.

Filed under California Government, Energy Industry, Environment and Climate by

November 23, 2008

CalPERS cuts 80 private equity funds

CalPERS has sold 80 private equity partnerships with a net asset value of $2.1 billion on the secondary markets, according to a report in Pensions and Investments

Leon G. Shahinian, senior investment officer, alternative investment management group, said in an interview that the $189.9 billion California Public Employees’ Retirement System, Sacramento, eliminated 60 partnerships from its alternative investment management program in July and August, he said. UBS assisted in the selection and sale of the private equity fund interests. Mr. Shahinian wouldn’t identify the funds or give selling prices. But according to CalPERS’ June 30 Alternative Investment Management Program Fund Performance review, funds missing from the June 30 list that had appeared on a year-end list run the gamut from buyout to venture capital to a few distressed debt funds and include the following: Technology Partners Fund VII, Thomas Weisel Capital Partners LP, Ticonderoga e-Services Fund II, TL Ventures V, Weston Presidio Capital IV, EuclidSR Biotechnology Partners, JPMorgan Partners Global, Thomas Weisel Global Growth Partners B, Thomas Weisel Strategic Opportunities, Provender Opportunities Fund II, Thomas Weisel Global Growth Partners II, Thomas Weisel Healthcare Ventures, Alta California Partners Fund II, Kohlberg Investors V, OCM Opportunities Fund V, OCM Principal Opportunities Fund III, Paladin Homeland Security Fund, Palomar Ventures III and Belvedere Capital II.

London-based private equity research firm Preqin estimated that funds sold for $2.1 billion in late 2007 in the secondary market — which trades private equity stakes between the pension funds and endowment funds that want to exit or buy. Preqin determined that the net asset value of funds sold equates to 9 percent of CalPERs overall portfolio, and calculates the remaining value of its private equity portfolio at $21.5 billion.

Calpers didn’t confirm Preqin’s calculations. The pension fund said it couldn’t specify how much more it gained from the sale in 2007, when the market was peaking, than if it had tried to sell it today.
But Leon Shahinian, Senior Investment Officer at CalPERS private equity program, said via an email from CalPERS spokesman: “In today’s market, we would have had hundreds of millions in losses.”

The pension fund said that its strategy dated back to late 2005, when its Alternative Investment Management program (AIM) presented a strategic plan to the CalPERS Board to lessen the administrative burden of having so many funds to oversee, and to optimize long-term private equity performance. In 2006, it hired UBS Investment Bank to scrub its private equity portfolio and develop a list to sell. At that time, it had investments in several hundred funds.

The inital sale of the $2.1 billion assets — which were sold in the secondary market and not all in one go — was in the third quarter of 2007, when the Dow was ranging between 13,000 to 14,000.
CalPERS said there were 80 partnerships in this portfolio and 60 different general partnership relationships, diversified over various private equity sectors such as venture capital, distressed, buyouts, etc. Sales were completed in the fourth quarter of 2007.

Filed under Banking and Financial Services, California Government, Venture Capital by

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