Relationships within themselves. Lafco demonstrated it better in the engineering their portfolio than others we feel that my name is went through the same cycles through the 2004 they sold all the assets and 2007 fund a tough time to start a fund theyre doing well. I find the 2007 fund they still put in a lot of the money fast when you look at 2006 or you know or right around there thats when we put it in quicker or 2005 i just seen the worse of the worse so ive gone through each one as you said they were the bank and they couldnt even get the loan from the bank so long as were not loading up what good many and the nordic system is if you recall over the last couple of years weve emphasized managers that are 55 and 50 actual under that in many cases it is depending on the market we do take into account we get comfort that my name is. My name is will recognize that how theyve used the leverage in the most recent fund gone to the protection textbook d only the rate of 64 against an l t v covenant they dont put themselves in that sdajsz position. Whats the maximum l t d. Depending on the timing and evaluation they may not bring it to that limit currently it is at 64 and. And in 0 and 07 they were all banks. Thats right thats right. 4 and 07 they were all banks. Thats right thats right. Were saying we want it in moderation where are we at when it comes to leverage at that size well determine if that is a moderate level to us. For the portfolio as a whole i think the sentiment is correct but until we know some type of leverage on the portfolio it sound good but no meaningful a. Roughly our portfolio is 70 percent leverage but the investors have been modified in their approach that jumped out as pretty high but wow. Given the long track record and the relationships with the bank theyve gone more comfort to we dont have a highly leveraged portfolio thinking of the evaluations but im sure youre aware of most of the new commitments have been will proposed that actually take other risks operating and Development Risks and less Financial Risks i guess this is one thing under did Fund Document is that helpful. Yes. Yes. I guess the optimum question do you make this investment with the leverage of 75 if the marketplace give us us 60 percent of leverage thats where i want to put our money your blending all the real estate together and the leverage is half it is based on the leverage component which were targeting 15 and in most everything the one highly leveraged is 7 by 7 that will reward us. Its been 7 by 7 percent i eyed 15 i wanted to give them something to beat it will be a challenge for them and us to meet those numbers our portfolio meets the 80 percent hurdle were not getting 15 percent in the Real Estate Investment you know some of the sectors and more inefficient market will have a chance to approach those levels anything on behalf of 15 percent is excellent this think an excellent opportunity with the leverage level. Evaluations going in so it didnt feel bad when you leveraged up something in 09 or 10 because things were cheap i know theres a lot of great real estate and therere a lot of distress im thinking what commissioner makras said we didnt have leverage in the portfolio we were low on leverage and in the highest quality that was good and bad not a lot of return so i think that is just value and leverage we have to be cognizant of. If the first deal is it more of an ad Value Investment and they want to put more leverage id hate to restrict them by be artificially saying hey close to a Million Dollars commitment but we want to give them the flexibility to execute their strategies under all circumstances. Id like to entertain a motion of staffs recommendation and ill make the motion. Ill open up for. Any questions or comments by the commission seeing none all in favor, say i. I. Passes unanimously thank you very much again back and call item number 6 our minded certain item for 2 oclock. Thank you, norman and bob and eunice is going to join me as well a couple of things that is a recommendation to make a change and to hire an mp c as our Investment Consultant is on page 2 n pc is hundred and 80 million in consulting assets nearly 500 billion in the intention consulting it is a significant commitment to the public plans it is a entirely internally opposed and gifted within its ownership more than thirty partners and no partner owns anymore 22 percent the capabilities of the firm nearly 2 hundred of the employees is investment professionals and have a significant investment to alternative assets their sources entirely come from Investment Consulting and not from other sources youll see the credentials on page 3 of the proposed Consulting Team mr. Martin mr. La bow and ms. Smith and another colleague to meet with should the board choose on page 5 one of the things that attracts us to this the breath and the depth of their Investment Research capabilities you youll see some of the white papers they have alternated over the years and youll see on page 7 they have an annual conference specifically for pension fund ive talked to half a dozen references that refer to this as the best collective conference they go to much r5r9d by the peers so believe it or not in this is there is Greenwich Associates provides Research Among did pension fund clients with the satisfaction with their Investment Community and any pc ranks one and two and one and two overall for the last several years youll see some of the recognized theyve been given by the various third partys and it is quite a distinguished list with that im going to turn it over to bob and u nisz in his and i met with the consultant the Consulting Team those meeting and the aggregate 6 plus hours and also had several followup californias with various firms to clarify certain questions and meet internally amongst ourselves at various times with that im going to turn it over to my colleague. Quick questions by the commission . Seeing none, are were going to have a chance to speak to this. Are they here. Yes. They plan to make in the board wishes about a 15 minute or so presentation followed by a q and a well take as long as the board needs regarding q and a. Thank you. I have been on another board that used them as a consultant so a large 6 or 7 billion i can answer some questions about your experience ever using them i did not realize they choose mp c but ive had the experience what he said was true i find the education is excellent their conference was you know very forwardlooking they have their allocation and look at it how accurate we were with that, people are so to speak it is a really, really great their bench is very valuable really deep but i found theyre very unusual about picking critiquing managers hard to find the and you find the consultants to do the this is valuable their beverage bench is so laceration ive not had a bad experience but 13wr5k9d a lot that board we split i havent 13wr5k9d with them in 4 years i believe they selected one of the people to run santa fe temporarily the proposed lead consultant allen martin was the interim c i o. Theyre an unusual people. They selected a lot of small critiques what about minority and women owned firms when i go through this i cant see that. I think you should address that. But your experience is that something that was presented to you. I see they have plenty of women partners and a whitehead variety of people working in the firm it didnt come clear but i want to know. I think that is a good thing to address. Right. And it had been interesting after social investing. Thats the next point so that didnt come across in this report. I believe the founder was at the conference. Okay. He did speak. There are questions not answered. Thats a good, good point. Let me ask you a question obviously where the rubber meets the road is performance one of the most important things the k340u7b89 recommends the Asset Managers of the public securities and public stoppages and bonds our portfolio has not really outperformed the benchmark so if you could address have 82 you seen other funds have they outperformed on a risk basis. Yes. Commissioner a very good question were attuned to the same any mp cs the average of their clients are outperformed others plans in 25 of the last their 29 year history so particularly good performance theyre to show you some detail but of theyre under performances or all of the Traditional Market classes traditional Asset Classes and sub Asset Classes there are solid out performances in the world where the an end to the means is not outperform ill see that for yourselves and ill concur with commissioner paskinjordans comments that m pc is a consultant that takes the less traveled road in terms of recommending managers that are noted typically used by other people more typical to use specialists and smaller managers lift out firms you know of new strategies with proven teams have all the ac men to be successful those are their attributes less of the same old here done that. Wlo what about the group asia i believe they did now imthat was a time i knew them, they were in the process of meeting them give them that exposure. Ive not seen that in the materials. Good question. Ill add on to the comment in the presentation theyre talking about the assets classes commissioner meiberger a couple of comments the bottom describes the methodology those are averages and fees so when you look at the those numbers versus our performance numbers you get the strategies that are met i want to make those differentiate theyre attempting to identify where theyve added value by adding managers a couple of caveats it is active managers only. If i followup on commissioner meibergers comments and exceeding the benchmarks how did they perform in the last 29 years with the similar organizations like our like arizona or Orange County im interested in taking our bites and our ranch versus the average of several hundred clients because everyones is not quoted to the same opportunities again question we didnt ask that question the sample size is pretty small is it theres 7 clients i believe of more than 25. 20 clients of 8 billion or more. So were in the right place. Right the afternoon of the 20 clients has been with them for slightly under seven years and oftentimes when your coming in a new account your inheriting a legacy portfolio and it could take you years to build it more optimum to you. Do you mind maybe a followup doing that and sure i can say that in this instance i made all those calls called 13 references 5 existing clients, 5 existing managers and 3 form clients to ask what they thought of m n pc the satisfaction of the seat allocation and manager selection was unusually good and in terms of the manager side they stood i take it in terms of level of sophistication and detail grand later to which their consultant are researchers would evaluate their strategies so the references checked out unusually good. Would you mind sharing the worst of the references so we have a flavor of the other side of that. Yeah. Obviously whatever new village their clients would be if they moved on another if they had to learn and do better sections. Ill you want me to share an example now. Yes. So one of the cloys for which they were terminated so why were they terminated a 20 billion plan they were hired by previous c i o and that c i o and one or i guess one significant person on the board just were at odds with each other c i was opted or left so the new c i o in terms of how to make a winning pact and create a more you know organization that is working together n e pc was sacred thats been almost 5 years thats coming back to bid sometime soon and look at it rehiring and teaching. That was one example the other nothing stood out to me as anybody having a bad experience. So i said theyre taking a serious look at hiring them back this organization didnt go through the bid process they can select them. No, i believe theyll do American People rfp and so this company has a contract. And the client has a serious look at them. Commissioner nothing stood out as egregious in terms of anybody having a bad experience youll see that as confirmed in the greenwich the scores are unusually good. Commissioner driscoll. I want to ask a question about the forecasting i got another email part two in terms of manager selection one of the things im proud of in page thirty and 31 of the brochure that was handed to us of the hundred and 60 observations and the classes theyve beat the benchmark engross of hundred and 37 out of hundred and 60 thats a high batting average so taking out the necessities to find out when are they going to talk about themselves i dont know but in case youve not had a chance to look at it. Call them in. At your pleasure. Okay. Were ready. Welcome everyone. Board members id like to introduce to my further left is allen martin 46 years of Institutional Investment experience and hes the proposed lead consultant on our plan tim is the chief Investment Officer and Carolyn Smith consultant with redwood city offers and dan also a consultant proposed consultant on the plan that is allen right hand man on the strategy. Welcome everyone. Thank you. Are we prepared for discussion items we have some we can get to many are in a few minutes our bios are other than the the first package we were happy to were once again we had a relationship with San Francisco and lastly i was born if st. Lukes hospital im a native San Francisco it is with great privilege that tim is our c i o 83 he is many credentials hell help us with the allocation activities well engage rightofway and carlene spent 20 years shes a strong background and dan is one of the guys was a performance analyst and moved up the firm as a grasp of activities we pursue if you turn to page 3 weve laid out why we think you should hire us well talk about sub japantown those views were a difference and 10 year team between the 4 of us 75 years of experience in Investment Management in advisory activities i ran the Bankers Trust for a number of years with the fiduciary officer in that organization were the largestadvisors as measured by greenwich and in a world with the issues that are complex not only from a investment context but a social context having a large dedicated Research Team of 49 people with particular expertise in private markets makes unus one of the Largest Research organization tim b will cover the background in research ill spend a few manipulates we go to see that our clients do well and ill show you in a moment the clients over tune has done well in terms of the performances of the programs and the recognized theyve received from their peers and from a Client Satisfaction stand out with that, ill turn you to page 5 here are overhead attributes of the pc many employees 12 in redwood california the team of dan and carolyn and i work out of redwood city local to you two were entirely Employee Owned a lot of smaller consulting firms have difficult when a leader leaves were oakland by the 34 partners the largest single owner only owns 18 percent weve transitioned that management to the next generation tim sits on the one committee i sit on the executive committee we dont do anything other than provide a trusted advisory with our clients we we have 2 we have discretionary clients those are set up exactly the way a normal advisory business is a lead consultant they work with the client the difference is that consultant will go to the directors of n pc and select the rigorous process to make sure that all clients are treated equally we dont operate any minimal fund and not involved in we have an allocation process that prevents conflict we think large public funds should indeed retain an outdoor advisors we had one situation with the Santa Fe Police and fire
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