HomeMy WebLinkAboutMinutes Fire Pension 040705PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
April 7, 2005
A meeting of the Board of Trustees was called to order at 11:02 A.M. at Station 1, Palm
Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Ed Morejon Margie Adcock, Pension Resource Center,
Tom Murphy Administrative Manager
Steve Rogers Mike Welker, Bogdahn Consulting,
Richard Beladino Investment Monitor
Pedro Herrera, Attorney
MINUTES
The Board reviewed the minutes of the meeting held February 28, 2005. A motion was
made, seconded and carried 4 -0 to accept the minutes of the meeting held February 28,
2005.
PRESENTATIONS BY INVESTMENT MANAGERS
REAL ESTATE
ING CLARION
Richard Cohen appeared before the Board. He stated that his firm was based out of New
York and they are owned by ING Asset Management. He stated that they are the largest
real estate manager in the works with $21.4 billion in assets. They are a national firm
with 58 offices throughout the United States. He provided a representative client list. He
provided an overview of the real estate markets. He stated that the global investment
universe represents about approximately $100 trillion and about 47% in the United
States. Real estate is about 4% in the United States or about $4.8 trillion. He reviewed
the historical returns by asset classes over the 1, 3, 5 and 10 year periods. He discussed
the Lion Properties Fund. He stated that it was a core diversified real estate fund which is
open- ended. The Fund could get in and out of it on a quarterly basis. They invest in four
major property types: office, industrial, retail and multifamily. The objective is to return
9 to 11 % over a complete market cycle which is 7 to 10 years. They have $2.5 billion in
total assets. They have 95 investments in 28 markets. The return has been 10.14% since
inception of about 4 years and 3 quarters. He discussed their valuation policy noting that
they have external quarterly appraisals of each asset. He reviewed the key portfolio
statistics. He stated that they seek younger asset with an average property age of 7.5
years. This makes it less expensive in terms of upkeep so more can be paid for dividends
or reinvestments. He reviewed the performance for the fund as of December 31, 2004.
He reviewed the risk adjusted performance and noted that they have a lower risk with a
2
higher return. He reviewed their investment strategy. They identify and exploit sectors of
relative value, focus on sustainable cash flow and use active management to capture
excess. He stated that there were 80 investors in this product. It is a low risk, low
volatility strategy.
CNL
John Bishop appeared before the Board. He stated that his firm was based in Orlando
and was founded in 1973. He stated that they are a major player in restaurants, retail,
hotel and hospitality markets, assisted living markets and recreational properties. He
stated that income is the reason to invest in real estate. He discussed the unique benefits
to investing in real estate: safer income, more income, stable, protection against inflation,
and not callable. He provided the example of Harley Davidson. He stated that they have
REITs for all categories so have an umbrella fund that includes all of the markets. He
noted that this product is brand new. He stated that they will invest no more than 25% in
any one sector. They own the land and the buildings and own them in fee simple. They
deal with major players as tenants and not mom and pop companies. He stated that they
have a $100 million offering expandable to $250 million and it has a life expectancy of
10 years.
INTERNATIONAL
FREEDOM CAPITAL MANAGEMENT
Jack Farland and Michael Spencer appeared before the Board. Mr. Farland stated that the
company is privately owned and there are 8 principals of which 7 are actively involved
and 1 is retired. They have $2.9 billion under management. He stated that he has been
with the company for 4.5 years and the company wants to expand its presence in Florida.
He reviewed an organizational chart of the company. Mr. Spencer stated that Polaris
Capital Management has total assets of $592 million with Freedom International having
$96 million. He reviewed performance as of February 28, 2005. He reviewed their
investment philosophy and objectives which are to generate superior returns with lower
than market risk. They focus on absolute risk and company specific things. He reviewed
the investment process. The portfolio has about 30 to 50 companies and the turnover is
30% a years. They have 10 -20 news investments per year. They spend most of their time
on fundamental analysis. He explained why their process is unique. They use primary
sources of information, use cash flow to determine valuation, adhere to global cost of
equity, use detailed financial models, use an investment process that is sound and
repeatable, and have a long term track record. He discussed fees.
Ed Morejon departed the meeting.
OPPENHEIMER FUNDS INSTITUTIONAL
Marco Spinar and Graham Seagraves appeared before the Board. Mr. Seagraves stated
that they are the money management arm of Oppenheimer Funds and they have $5.6
tCl
billion in assets. Their main office is in New York. They have 115 institutional clients.
They have a global equity investment team and he discussed the depth and experience of
the team. Mr. Spinar stated that their global fund dates back to 1969. They have little
turnover in terms of managers and are a very cohesive team. He discussed their
investment objective noting that it is capital appreciation over the long term investment
horizon of 3 to 5 years. He discussed their investment philosophy noting that they are
opportunity oriented and not index oriented. He reviewed their investment process and
used Embraer as an example. He reviewed the portfolio construction and discussed their
buy and sell discipline. Mr. Seagraves reviewed performance as of December 31, 2004.
He stated that there are about 114 stocks in the international portfolio and about the same
in a separate emerging markets portfolio. The international portfolio has about 15% in
emerging markets.
ALL CAP INVESTING
ROCKWOOD CAPITAL ADVISORS
Andy Holtgrieve appeared before the Board. He stated that they were founded in 1997
and is headquarter in St. Louis, Missouri. They have over $1 billion under management
for 50 accounts and 12 are public funds in Florida. He stated that 70% of their business
is in public funds. He stated that they have an experienced team of professionals with a
disciplined investment process and a proven track record of success. He stated that they
were a fixed income company and then recognized the need to provide equity
management. Contravisory Research and Management is a sub advisor for the equity
management. He stated that they are a quantitative manager. He reviewed the investment
process and the equity characteristics. He reviewed the equity performance. He stated
that since 1972 the market has gone through 9 down years and they have outperformed
the S &P 500 in 8 of those 9 years. He stated that they have a 5% position in
international.
DANA INVESTMENT ADVISORS
Joe Veranth appeared before the Board. He discussed their small cap investment process.
He noted that it is the same process that is used for large cap strategy. He stated that they
are sector neutral with 50 to 55 stocks in the portfolio. They have outperformed in 11 of
the last 18 quarters. He reviewed the portfolio characteristics and sector distribution. He
stated that they have the ability to blend the small cap with the large cap strategy and can
react to market changes. He discussed their global tactical strategy which is to use
ishares.
DISCUSSION ON THE PRESENTATIONS
Mike Welker reviewed the performance for all of the managers with the Board. He noted
that the best mix based on past returns, risk and market ratios are Dana for large and
small cap with Freedom. He noted that by having all the domestic equities with Dana,
they will be able to make the tactical decisions based on the market throughout the
4
quarter. He stated that he did not thing the international product offered by Dana was up
to speed and was basically just buying the EAFE index. He recommended looking at a
specialized manager for international as it can give the Fund 6 to 8% in returns. He noted
that real estate would be a nice complement and the money would be taken from the bond
portfolio to fund it. He reviewed the index relative risk statistics and the market capture
ratios. There was a lengthy discussion on the presentations and the various asset classes.
A motion was made, seconded and carried 3 -0 to negotiate a contract with Freedom
Capital for international. A motion was made, seconded and carried 3 -0 to invest in the
all cap strategy with Dana Investment Advisors.
The Board reviewed the revised Investment Policy Statement. A motion was made,
seconded and carried 3 -0 to approve the revised Investment Policy Statement.
ADMINISTRATIVE REPORT
Ms. Adcock presented the list of disbursements to be made. A motion was made,
seconded and carried 3 -0 to approve the disbursements listed.
OTHER BUSINESS
There being no further business, and the next meeting being scheduled for Monday, May
16, 2005 at 11:00 A.M., the meeting adjourned at 3:55 P.M.
Respectfully submitted,
Ed Morejon, Secretary