INVESTMENT COMMITTEE REPORT
Garth Flint addressed the Board on the 2010 first quarter results for investments. He addressed the current state of the economy and issues with employment.
Kurt Stabel indicated that there are concerns about economies in the “developed world” (US, Continental Europe, UK) slowing and that the US dollar is expected to be weak going forward due to massive amounts of government debt. But, as economies in the “developed world” are expected to grow slowly going forward expectations are that “emerging market” economies will become the engine of worldwide growth. Garth mentioned that if the government does not get the oil spill situation under control in Louisiana it could impact a lot of businesses. Todd Layfer asked how the Louisiana situation affects commodities assets with the price of natural gas. Kurt Stabel stated that natural gas prices are strongly tied to industrial production. So as the economy slowed in the US, natural gas prices cratered. Further, massive “shale gas” deposits have been found in the continental US which has further pushed down prices and they continue to stay at low levels even with the current situation in Louisiana.
Garth reviewed the investment portfolio performance and stated that it has done well relative to the policy index. Garth referred to the manager performance and indicated that Knightsbridge has had a really good run verses the Russell 1000 Value. He mentioned that Cohen & Steers, under the one-year mark performed under the benchmark at the 85th percentile, however they have good five and seven year numbers. He indicated that Stralem for the one-year ranked in the 73rd percentile, but shows better in the longer term by outperforming the benchmark. He stated that J.W. Seligman has done well with the one year, although they were slightly off with the first quarter 2010 which is nothing to be concerned about. He referred to Artisan and indicated that they have performed well in most time periods. He stated that Columbia aka Brandes has good three year numbers and ranks in the middle at 53rd percentile. He indicated that they have been taking a closer look at their performance and may consider a replacement. He mentioned that PIMCO has outperformed the index by 8%+ and ranked in the first percentile for the last five to seven years. He stated that their goal is to outperform the benchmark by 60 basis points and the portfolio has far exceeded that in the five and seven years. He referred to Gresham and indicated that they had just started with them and were a little negative for the quarter.
Kurt Stabel addressed the PIMCO Distressed Debt fund and indicated that it was up about 50%. He indicated that the fund has done well. Further, after listening to the fund manager’s quarterly conference call he said they indicated the fund will be winding down sometime in mid 2011. He referred to the Building Fund and stated that they will work with Todd and LAFRA’s auditors to develop a report or cash flow analysis based on the funds gained from the sale of the 2900 Temple Street building in relation to the future purchase of real estate.
Kurt Stabel also mentioned that he and Frank Hernandez had attended the IFEBP Investment Institute in Phoenix, AZ.
