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MINUTES OF MEETING HELD
February 11, 2011
A meeting of the Board of Trustees was called to order at 11:35 A.M. at Council
Chambers, Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Tom Murphy Margie Adcock, Administrator
Rick Rhodes Pedro Herrera, Attorney
Ed Morejon Joe Bogdahn & Troy Brown, Investment Monitor
Mark Joyce
Donna Wisneski
INVESTMENT MANAGER PRESENTATIONS
Joe Bogdahn appeared before the Board. He provided a brief background of the
discussion at the last meeting and the reason why the Board was interviewing Rockwood
and ICC today. He noted that the Board was interviewing for a possible replacement for
the Dana Large Cap Growth Equity portfolio. He stated that in addition to replacing the
Growth product, there would be a change in the equity allocation so that Dana Large Cap
Equity allocation would reduce from 45% to 38.5% and there would be an allocation of
38.5% to either Rockwood or ICC. Mr. Bogdahn reviewed the summary table of the
blended allocations adding in Rockwood and ICC. He reviewed the performance of the
current portfolio compared to the blend with Rockwood and ICC using the trailing
returns through December 31, 2010 on a quarter, 1, 2, 3, 5, and 7 year time period. He
reviewed performance using calendar year periods. He reviewed the risk and return
analysis.
ROCKWOOD
Andy Holtgrieve appeared before the Board. He stated that he was the managing partner
and owner. His firm is an independent, employee owned investment management firm
that was founded in 1997 and is located in St. Louis, Missouri. They have a very
disciplined process, a tremendous amount of experience, and superior performance. He
stated that they began the firm as a bond only manager. They teamed up with
Contravisory Investment Manager (CIM) in 2004 for equity management services. He
stated that the equity team is located in Boston. He discussed the equity team of CIM. He
noted that CIM was founded in 1972 and is a sub advisor to Rockwood. Mr. Holtgrieve
stated that they have an all cap, opportunistic and theme based approach to equity
management. He discussed their investment objective, which is to beat the benchmark
over time with a particular emphasis on outperforming during down markets. He
discussed their investment philosophy. He reviewed the relative price cycle. He stated
that the sell process is the key to their process. Sales dictate what they do on the buy side.
He reviewed their investment process. There is not a lot of turnover and there are 40
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stocks in the portfolio. He reviewed their calendar year capitalization and value versus
growth from 2000 to 2009. He reviewed performance as of December 31, 2010. He
reviewed their fee schedule, noting it was 70 basis points on the first $10 million. He
reviewed their representative Florida client list. There was discussion on the portfolio
managers at CIM and their research process. There was a lengthy discussion on CIM and
their relationship to Rockwood.
Andy Holtgrieve departed the meeting.
ICC
Steve Stack appeared before the Board. He stated that they are located in Orlando and
have offices in New York and California. They are 100% employee owned with $3.27
billion in assets under management. He reviewed their representative client list. He
discussed their multi cap equity product. He reviewed their investment process. They
look at market capitalization, sectors and style. He reviewed how their process could
forecast significant shifts in the portfolio positioning in anticipation of a change in the
market leadership. He discussed their repositioning of the portfolio in advance of the
2000 bull market peak and 2002 bear market bottom. He reviewed their portfolio profile
as of December 31, 2010. He reviewed their top ten holdings and portfolio characteri stics
as of December 31, 2010. He discussed their fees, noting they were negotiable and would
be willing to go down to 50 basis points.
Steve Stack departed the meeting.
DISCUSSION ON PRESENTATIONS
The Board discussed the presentations by Rockwood and ICC. Mr. Bogdahn reviewed
the risk analysis of Rockwood and ICC individually. He reviewed the up capture and
down capture ratios for both. He noted that ICC has clearly outperformed Rockwood. Mr.
Brown discussed their process for identifying these managers in a search as candidates
for the Fund. There was a discussion on the transaction. Mr. Bogdahn stated that they
would recommend engaging a transition manager to assist in this process. Mr. Brown
discussed the process and also recommended using a transition manager. He noted that
there would be no cost to the Fund to use a transition manager. He stated that using a
transition manager here would be more efficient. He noted that if the amount to be
invested was less than $5 million or there were less than 70 positions, then it would not
really be worth using a transition manager, but that is not the case here. Mr. Bogdahn
recommended that the Board hire ICC. There was a lengthy discussion. A motion was
made, seconded and carried 5 -0 to negotiate a contract with ICC at 50 basis points to
replace the Dana Growth portfolio with domestic equity to be 50% Dana Large Cap
Equity and 50% ICC Multi Cap Equity. A motion was made, seconded and carried 5 -0 to
use a transition manager to facilitate the transfer of assets from Dana to ICC.
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CITY'S REQUEST FOR BOARD PARTICIPATION
Mr. Morejon provided the Board with a letter he drafted to the Mayor regarding the City
Manager's request for participation regarding the unfunded liability of the Plan. Mr.
Murphy stated that he received an email yesterday regarding a letter dated February 10,
2011 advising of a meeting on March 1 at Lakeside Center from 1:30 p.m. to 3:00 p.m. It
requests a representative to attend the meeting to meet with City Staff. Ms. Wisneski
stated that in conversations with the Finance Director she thinks the City Manager has
been tasked with the process he has outlined in his original January letter. She
understands that the intent of the meeting is to get all the parties together to discuss the
issue at hand.
OTHER BUSINESS
There being no further business, the meeting adjourned.
Respectfully submitted,
Tom Murphy, Secretary