This content is from: Corner Office

Weekend Giant Reading: August 14 – 16, 2015

Welcome the weekend, everybody. Here’s some news for your reading enjoyment.

Welcome to the weekend, everybody. Here’s some news for your reading enjoyment:

- Today’s Sign The Apocalypse Is Coming: You know things are bad in the asset management industry when the hot new insurance product is the equivalent of malpractice insurance for asset managers: “Rather than do our jobs, let’s just insure ourselves against not doing our jobs very well . . . ” Sigh.

- Green: Several Giants are explicitly doing ‘green’ deals, with two announcements this week alone. For example, New Zealand’s Super Fund just backed a Silicon Valley glass maker that uses auto-tints to reduce energy consumption. Also, Sweden’s AP4 wants to invest in environmentally-friendly water companies. This seems increasingly common and aligns with what I’m seeing. Perhaps it has to do with the big losses that are stacking up on Giants balance sheets from their traditional energy assets?

- The Fee Machine: A new lawsuit claims that egregious fee models are a breach of fiduciary duty. The implications of this case are massive. Pass the popcorn.

- Overseas Expansion: The Korea Post is the latest of three Korean Giants to set up shop in New York City. They join the Korea Investment Corporation and the National Pension Service in the Big Apple. Here’s why these Giants are trying to get “closer to the action."

- White Knights: Russia’s government said it’s willing to use 60% of its $75 billion sovereign wealth fund to help struggling Russian companies.

- I’m Confused: In July, CalSTRS publicly reported its gross investment returns were 4.8% for the 2014-15 period. I have a few questions on this. First: Why is it reporting gross returns instead of net returns? Clearly it’s the latter number that would have an impact on the health of the pension, so it’s rather odd to present the former. Second: Why is CalSTRS even trying to report a gross return when it has already admitted that it does not collect the data one would actually need (i.e., performance fees) to provide a gross number that would be credible? The confusing thing for me here is that they seem to have presented some intermediate gross-net number that mixes net and gross results in a manner that seems to benefit . . . who, exactly?

- Selfie I: I just published a new paper with Eduard Van Gelderen, CIO of APG, on “Knowledge Management in Asset Management,” . . . or really the lack thereof.

- Selfie II: I published a new working paper this week with Rajiv Sharma entitled, “Capitalising on Institutional Co-Investment Platforms.” Enjoy.

- Selfie III: Solo PE deals clearly outperform funds and co-invest. But going solo is hard. Here’s my take on Giants “soloing.”

- Hiring: Some of you know that we at Stanford are helping to launch a new “Aligned Intermediary” (working title), which will be a new, not-for-profit investment intermediary to identify, screen, and assess high-potential resource-innovation companies and projects for commercial investment that could also produce impactful and profitable solutions to climate change. We’ve secured funding for this new entity from a series of Foundations and are now looking for the Interim CEO. Applications for this role are due . . . today!

Have a great weekend!

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