HomeMy WebLinkAboutMinutes Fire Pension 051506PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
May 15, 2006
A meeting of the Board of Trustees was called to order at 9:41 A.M. at Station 3, Palm
Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Richard Beladino Margie Adcock and Denise Clougherty, Administrator
Philip Buttaravoli Robert Sugarman & Pedro Herrera, Attorney
Tom Murphy (9:45 A.M.) Joe Bogdahn, Investment Monitor
Ed Morejon
Steve Rogers
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The Board reviewed the minutes of the meetings held February 21, 2006 and March 10,
2006. A motion was made, seconded and carried 4 -0 to accept the minutes of the
meetings held February 21, 2006 and March 10, 2006.
REAPPOINTMENT OF THE 5TH TRUSTEE
It was noted that the term for Philip Buttaravoli expired. A motion was made, seconded and
carried unanimously to reappoint Philip Buttaravoli as the 5h Trustee for another two year
term.
Tom Murphy entered the meeting.
INVESTMENT MANAGER REPORT
Mike Dana appeared before the Board. He stated that the economy is good. He thinks most
of the returns will come from the equity market. He advised that for the year to date through
April 30, 2006 the portfolio is up 9.68 %. He discussed the performance for the quarter
ending March 31, 2006. The total portfolio was up 3.61% for the quarter while the
benchmark was up 2.67 %. The fixed income portfolio for the quarter was down .24% while
the benchmark was down .38 %. Equities for the quarter were up 5.88% while the
benchmark was up 4.21%. He reviewed the market outlook noting that the market expects
at least one more interest rate increase. He noted that the asset allocation was 50% in large
cap equities; 13% in small cap equities; 24% in corporate bonds; 7% in federal agencies; 1%
in government bonds; 4% in ARMS; and 1% in cash. Mr. Dana reviewed the large cap
sector distribution. He noted that they are sector neutral. He reviewed the holdings in the
portfolio as of March 31, 2006. He then reviewed the compliance material. He thinks it is
going to be a good year. They have ore yield than the index and will just stay shorter. He
has never seen a better period of time for equities. He stated that the portfolio is in good
shape and they are where they should be.
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INVESTMENT MONITOR REPORT
Joe Bogdahn appeared before the Board. He discussed the investment performance for
the quarter ending March 31, 2006. The Fund was up 4.33% for the quarter while the
benchmark was up 3.78 %. The total market value of the Fund as of March 31, 2006 was
$14,959,000. The asset allocation at market was 66% in equities; 33% in fixed income;
and 1% in cash. He noted that the equity portfolio has an allocation of 85% to Dana and
15% to Freedom Capital. He stated that the portfolio as a whole continues to do well. The
Fund is in the 12`h percentile for the quarter.
Mr. Bogdahn reported that the fixed income portion of the portfolio was down .39% for
the quarter while the benchmark was down .39 %. Mr. Bogdahn reviewed the fixed
income background of Dana. He stated that Dana took over the fixed income portfolio in
the middle of 2002. The interest rates started to increase soon after that. He noted that
the fixed income securities were transferred in -kind from Bank of America and Dana had
to work out of some of those bonds. There were also credit quality issues. He noted that
Dave West did not have all of that institutional background at the last meeting. Mr.
Bogdahn stated that the universe numbers look pretty poor. It is a high quality bond
universe that has investment grade. He stated that there is a little bit of a disconnect with
the index he is using and he needs to tweak the universe he is using to compare them to.
Mr. Bogdahn stated that he did some analysis and noted that the bonds are a smaller
piece. The difference is not all that great. If the Board wanted to take more risk in the
portfolio to be in a higher percentage ranking, it would not amount to that big of a
difference. He stated that overall it would be about 20 basis points different. He noted
that while it would add about 20 basis points, the risk would increase. He recommended
that it was not worth it. If the Board hires a separate bond manager, there would be no
synergy between the portfolios. Given where the interest rate cycle is at and the bond
market is in general, he is not sure it would be a prudent move. He stated that he has had
a number of phone calls with the Dana representative. He thinks that the index that is
being used for comparisons should be adjusted to the Lehman Brothers Intermediate
Aggregate Index. As the bond market changes, he will look to Dana for their
recommendations but he does not feel that now is the time. Mr. Bogdahn stated that he
did look at some other managers but noted that on a risk adjusted basis, Dana is doing
fine. He is comfortable with the current strategy. There was a lengthy discussion.
Mr. Bogdahn reported that the total market value of the total equity portfolio was
$9,868,000. Equities for the quarter were up 6.73% versus the benchmark which was up
5.94 %. The equity portfolio managed by Dana was up 5.69% for the quarter while the
benchmark was up 5.31 %. The total market value of the equity portfolio managed by
Dana was $8,503,000. The international equities managed by Freedom were up 13.72%
for the quarter while the benchmark was up 9.47 %. The total market value of the
international equity portfolio managed by Freedom was $1,365,000.
Mike Dana departed the meeting.
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FREEDOM CAPITAL
Jack Farland appeared before the Board. He stated that he wanted to come by and meet
the Board. He stated that his office is in Ft. Lauderdale and he would be willing to come
to the Board meetings any time the Board would like. He reviewed the performance as of
April 30, 2006. He stated that the total market value of the portfolio was $1,431,157.62.
Since inception the portfolio is up 19.26% versus the EAFE which is up 14.78 %.
PRESENTATIONS BY SECURITIES MONITORING FIRMS
Bob Sugarman provided a brief introduction. He stated that part of the fiduciary duty of
the Board is to monitor securities to see if there has been a loss for fraud and to determine
if the Fund should be a lead plaintiff. He stated that there are a number of securities
firms that will look at that for the Fund. He stated that the Board can hire as many as they
want as many have different sources of information. He stated that he invited five firms
to make presentations to the Board.
BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO
Michael Pucillo appeared before the Board. He stated that he has been in practice in West
Palm Beach for all his life. He has been doing private securities litigation for almost 20
years. His firm has 35 lawyers: 9 in WPB, 9 in San Francisco; and 18 in Boston. He
discussed the law. He discussed the benefits of litigation. He noted that it results in the
responsible oversight of the litigation, large settlements, and lower attorneys fees. He
represents about 50 public pension plans around the county. They have an extensive
monitoring system. They get alerts daily to see if any client has a significant loss and
they do an evaluation. They provide written memos to the clients. He noted that given
the size of this Fund it is unlikely it would be a lead plaintiff. He stated that there was no
obligation and it was essentially a free monitoring service. There was a discussion on the
frequency of fraud. It was noted that it can be up to 1 %Z to 2 %. It was noted that the
statute of limitations is 5 years under the Securities Act. He stated that they provide
quarterly reports.
Michael Pucillo departed the meeting.
INVESTMENT MONITOR REPORT (CONTINUED)
Mr. Bogdahn stated that he also wanted to discuss the Investment Policy Statement and
Real Estate. He stated that the Board could schedule a special meeting to discuss this. He
noted that he already spoke with Mr. Herrera about the real estate firms he had listed and
he has reviewed and approved of the contracts. Mr. Bogdahn stated that he thinks ING is
the best choice but because they will not accept fiduciary responsibility and the fact that
they invest some of their own money in their fund, Mr. Sugarman advises that this is
unacceptable. Mr. Bogdahn stated that the three firms he would like the Board to hear
from are Invesco; American Realty; and Principal. There was a lengthy discussion. It
was determined that the Board would interview all three firms and have a special meeting
on Thursday, June 8 at 1:30 p.m. Mr. Bogdahn provided a reviewed Investment Policy
Statement for the Board to review.
Joe Bogdahn departed the meeting.
PRESENTATIONS BY SECURITIES MONITORING FIRMS (CONTINUED)
COHEN, MILSTEIN, HAUSFELD & TOLL
Mark Willis appeared before the Board. He stated that they are one of the top 25 firms on
the National Law Journal Plaintiffs' Hot list. They have a local presence and give back
to the community. They provide monthly or quarterly reports. He provided an article that
there was $1.8 billion unclaimed in the US shareholder class action lawsuits and 2/3 of
that was from fund managers failing to claim awards. They also do other work such as
anti -trust work, human rights work, and pro bono work.
Mark Willis departed the meeting.
LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS
David George appeared before the Board. He stated that his office is in Boca. He stated
that they have assets devoted to cases and obtain results. They are the largest class action
firm in the county. They monitor more portfolios than anyone else. They are a national
firm based out of San Diego. They bring a local and national presence. Besides
attorneys, they have CPA's and investigators. There was a lengthy discussion on the
process.
David George departed the meeting.
MAGER & GOLDSTEIN
Jayne Goldstein appeared before the Board. She stated that she is located in Coral
Springs. She stated that she is the attorney that tries the cases. She discussed the anatomy
of the cases and how long they take. She stated that the process is long but takes little of
the Board's time. She provides monthly or quarterly reports. She discussed her Florida
municipal pension plan clients. She stated that the Board would be dealing with a named
partner and she does all the monitoring herself.
Jayne Goldstein departed the meeting.
WEISS & LURIE
Jim Tullman and Rich Acocelli appeared before the Board. Mr. Tullman stated that they
both have 15 years experience. He discussed some of their cases. He stated that this is
something definitely worth pursuing. He stated that they represent 50 pension funds. He
discussed the process in detail.
Jim Tullman and Rich Acocelli departed the meeting.
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DISCUSSION ON PRESENTATIONS
The Board then discussed the various presentations on securities monitoring. A motion
was made, seconded and carried 5 -0 to retain Weiss & Lurie; Mager & Goldstein; and
Lerach Coughlin Stoia Geller Rudman & Robbins to do securities monitoring for the
Fund. Mr. Sugarman was directed to obtain contacts with these three firms to get the
process started. The Board expressed a desire to have the firms go back 5 years for their
analysis.
ADMINISTRATIVE REPORT
Margie Adcock presented the list of disbursements to be made. A motion was made,
seconded and carried 5 -0 to approve the disbursements listed.
ATTORNEY REPORT
Mr. Sugarman reported on the status of the disability application of Shawn Thurman. He
stated that he had all of the medical records. He stated that the discharge summary may
answer a lot of questions. He suggested that Dr. Buttaravoli read and translate the
discharge summary. If the Board is comfortable, a decision could be made today to set it
for a formal hearing on the question of whether it is heart disease. It was noted that Mr.
Thurman has a workers' compensation attorney, Mr. Sicking. Mr. Sugarman stated that
there is nothing in the regulations or laws or cases that define heart disease. There is no
legislative history. Dr. Buttaravoli stated that from his background, the discharge
summary makes it very clear that Shawn Thurman died of metastatic cancer. There was
cardiac involvement but it is secondary. It was determined that the Board needed an
objective consultant on the issue of whether Shawn Thurman died of heart disease. Mr.
Sugarman stated that he would send the records to Dr. Peter Segal, a cardiologist on the
teaching faculty Mt. Sinai Hospital on Miami Beach.
OTHER BUSINESS
The Board was provided with a draft revised Summary Plan Description prepared by the
Actuary. Mr. Sugarman stated that the Board should review it and provide any changes
to the Administrator so she can then forward such changes to the Actuary prior to the
next quarterly meeting. He stated that he would then review the final draft.
There being no further business, the meeting adjourned at 2:00 p.m.
Respectfully submitted,
Ed Morejon, Secretary