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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