Steve Davidoff reports that:Ouch!
The California teachers’ pension fund has joined forces with the investment firm Relational Investors to campaign for the breakup of the Timken Company into steel and bearing businesses.This is, of course, the same CalSTRS of which it was said in 2012 that:
The folks running CalSTRS projected a 7.75% return on equity. Then they changed it to 7.5%. In fact it was 1.8%. And no one was fired.Any yet these are the same idiots that people like Lucian Bebchuk want to empower to run corporate America.
My bottom line is that there is no reason to think portfolio managers will make good business decisions and that goes double for people who aren't even competent portfolio managers.
And ouch for the taxpayers of California where the under-performance of CalSTRS (and big cousin CalPERS) is going to cost real money. From Bloomberg April 16:
California Pension May Ask for 50% Boost to Close Gap
California taxpayers may see the municipal pension contributions they fund for the California Public Employees’ Retirement System rise as much as 50 percent under a plan to fill $87 billion in unfunded obligations.
Alan Milligan, the fund’s chief actuary, recommends that the biggest U.S. pension stop spreading out losses and gains over 15 years and instead set rates based on how much is needed to reach 100 percent funding within 30 years.
The Sacramento-based pension, known as Calpers, is about 26 percent short of meeting its long-term commitments. The state and cities contributed $7.8 billion in the last fiscal year, almost four times more than a decade earlier....MORE
