Institutional Investor's Alpha Magazine - February 2009 - (Page 53)

accumulate. But we’ll be working on several joint research projects and get to know each other really well.” It’s not clear, though, how far these synergies will develop. The bankruptcy of Lehman Brothers forced TRS to reassess that relationship. Investment managers led by CEO George Walker will acquire Lehman’s asset management business, which was not part of the bankruptcy proceedings. TRS says it is committed to its strategic relationship with the new entity, called Neuberger Investment Management. Harris insists that $1 billion “is a signiﬁcant account for each of the four.” Nonetheless, he proposed giving the managers more capital, only to be rebuffed by his board. In April the trustees balked when Harris made an offhand suggestion that individual external managers each be allowed to invest as much as 5 percent of TRS’s assets. That could have given the strategic partners as much as $5 billion apiece to manage. “That caught me by surprise,” says TRS trustee Henry. “My feeling is, ‘You’ve got a billion; now prove what you can do.’ ” Henry had another problem: He says he was miffed that he was not made aware of the steak house dinner until the day after it occurred, shortly after he had voted to allocate the initial $1 billion mandates. All told, Harris has placed about half of the maximum 30 percent of fund assets with external managers. The four strategic partners were chosen through a rigorous nine-month process, and their selections were ratiﬁed by the board. TRS has been doing due diligence on dozens of additional managers and expects the level of assets managed outside to reach 20 percent by next summer. Harris, who says he tries to stay above the political fray, retains strong support from the board and from politicians. Despite investment losses, there’s widespread acknowledgement, even among dissident board members and legislators such as Duncan, that the new strategy has saved TRS hundreds of millions of dollars. TRS is trying to manage political risks. Under a new incentive compensation scheme, Harris and other staffers won’t get bonuses for having outperformed their benchmarks this year; payments will be deferred for a year because the fund lost money. In September, Harris held an unprecedented conference call with TRS members to assuage concerns related to the demise of Lehman and other Wall Street events. TRS and Harris went on the road in October and November to deliver “report cards” on their new strategy to the state’s teachers and the public at large. “People are watching very closely,” says Harris. “We’re going to get out and tell our story.” Solutions for hedge funds, fund of funds, and private equity funds. The ﬁnancial markets shakeout of 2008 has changed everything. Now, more than ever, fund managers need audit, tax, and consulting professionals that they can trust to solve the growing challenges of the unpredictable markets. The global reach of McGladrey enables us to bring the full scope of resources necessary to provide our clients with timely and well-conceived solutions. So contact one of our Financial Services Industry practice leaders listed below. Because, in times like these, you need accountants that measure up. Martin Lax, CPA, MBA 212-372-1208 Martin.Lax@rsmi.com Sal Shah, CPA 212-372-1201 Kislay.Shah@rsmi.com E. George Teixeira, CPA, MS 212-372-1266 George.Teixeira@rsmi.com Jeffrey H. Yager, CPA 212-372-1269 Jeffrey.Yager@rsmi.com The challenges just got bigger. Do your accountants measure up? Email NYEURequests@rsmi.com to request a complimentary subscription to our Alternative Investment Watch newsletter. ©2009 RSM McGladrey, Inc. All rights reserved. RSM McGladrey, Inc. and McGladrey & Pullen LLP are two separate and independent legal entities. They operate in an alternative practice structure that enables them to work together to service clients’ business needs. RSM McGladrey Inc. and McGladrey & Pullen LLP are member ﬁrms of RSM International.

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - February 2009

Institutional Investor's Alpha Magazine - February 2009 Contents Letter From the Editor Longs & Shorts Digging Out A Call to Mentor Dicey Detroit The Constant Skeptic Cover Story: The Undaunted What Were They Thinking? Dark Days in Greenwich True Stories from the Commodities Files Return of the Native The Quest for Cover Moving On from Madoff

Institutional Investor's Alpha Magazine - February 2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.