CalPERS Approves $250 Million Investment to Relational Investors, L.L.C.Business Editors SACRAMENTO Sacramento, city, United States Sacramento (săkrəmĕn`tō), city (1990 pop. 369,365), state capital and seat of Sacramento co., central Calif. , Calif.--(BUSINESS WIRE)--June 20, 2001 The California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). Public Employees' Retirement System (CalPERS CalPERS California Public Employees' Retirement System ) has approved an additional $250 million investment to San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. , California-based Relational Investors (Relational), a fund that employs corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. activism to turn around under-performing U.S. publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. . Today's action increases CalPERS investment in Relational to $750 million. In 1995, the System made a $200 million investment in the fund and raised it by $275 million in May 1998. The additional capital will help Relational increase its ownership and influence by making more sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. investments. It will also allow the
fund to target larger companies that present opportunities for increased
returns.
"This new capital will allow Relational to make investments on a broader scale in the market," said William D. Crist, President of CalPERS Board of Administration. "Investments in larger companies with high liquidity offer an improved reward to risk ratio and will increase Relational's influence in the market enhancing the potential for greater returns on our investment." Relational's investment strategy often involves two steps. The fund makes a moderate investment and begins to communicate with the company's management, board of directors and other investors. Depending on the outcome of the communications, the firm may increase its investment to gain more leverage in negotiations with management. In cases of persistent underperformance or where other factors warrant, Relational may submit shareholder proposals or seek board representation. "We're pleased that this aggressive style of investing has enabled Relational to deliver strong investment performance," said Michael Flaherman, Chair of the pension fund's Investment Committee. "Their success merits this increase in capital from CalPERS." As of March 31, 2001, Relational made 34 investments. Examples include Apria Healthcare Group, Mattel, and Waste Management. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. returns on realized investments have exceeded more than 70 percent, versus an approximately 24 percent return for the same period if the cash flows had been invested in the S&P 500 Index. CalPERS is the nation's largest public pension fund managing assets of more than $152 billion. The System provides retirement and health benefits to more than 1.2 million State and public employees and their families. For further information on CalPERS, visit the System's Web site at http://www.calpers.ca.gov. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion