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Posts by dietrichknauth

I’m a writer and reporter based in Brooklyn, NY. My specialty is legal reporting, particularly government contracts law, government policy, and federal spending.

CalPERS weighs direct investments in private equity

The $323bn California Public Employees’ Retirement System (CalPERS) is exploring making direct investments in private equity, and is considering a wide range of options as it reviews its long-term strategy for the asset class.

At an offsite meeting in Monterey, California, CalPERS staff discussed options on a continuum from low-risk, high-cost, and relatively simple investments, such as investing in funds of funds, to higher-risk, more complex investments, including direct investment through CalPERS staff. CalPERS noted that direct investments would require very high reliance on expensive internal talent.

Read the full article: CalPERS weighs direct investments in private equity

Published by Money Management Report/Pageant Media.

CalPERS feeling the heat on PE investments

The largest public pension fund in the U.S. is feeling pressure over its private equity investments, and criticism over fee transparency has gotten under the skin of the giant fund’s CIO.

Although the California Public Employees’ Retirement System (CalPERS) has attracted criticism before over fees and risk, the negative attention comes at a time the fund is preparing to review its private equity strategy. The discussion at the fund’s June meeting fueled speculation that CalPERS could pull back from private equity, which currently accounts for $25.9bn of the fund’s $323.8bn portfolio.

Tensions were obvious from the start of the meeting, which took place on June 19. CIO Ted Eliopoulos opened with an unusual defense of a staff that he said had been “denigrated and attacked” over its investments in private equity. Eliopoulos suggested that CalPERS might be near a “tipping point,” where negative attention is “making it increasingly difficult for CalPERS to compete successfully in the private equity marketplace.” At the end of his opening statement, most board members offered applause in support of the private equity staff in attendance at the meeting.

“What happened was, Ted came out and had a pity party,” CalPERS board member J.J. Jelincic told MMR.

CalPERS’ private equity investments first became a particular target for criticism in 2015, when its investment staff reported that CalPERS didn’t have the ability to track carried interest payments that the fund made to private equity firms. Even with that history, the June meeting marked a notable shift in tone, and the CIO’s comments pushed other board members to publicly declare their support for private equity.

Read the full story: CalPERS feeling the heat on PE investments

Published by Money Management Report/Pageant Media.

LACERS scraps PE consultant search, accuses incumbent of fudging numbers

The $15.7bn Los Angeles City Employees Retirement System (LACERS) scrapped an ongoing search for a private equity consultant, with a member of the board expressing no confidence in the incumbent consultant and accusing the firm of inflating its recent performance numbers.

The LACERS board intended to choose between incumbent Portfolio Advisors over TorreyCove Capital Partners in its search for a private equity consultant after a final review of performance information from both firms. But instead of choosing a new consultant, the board canceled its RFP and decided to begin anew after board members expressed a lack of confidence in either finalist or the RFP process.

CIO Rodney June was prepared to recommend Portfolio Advisors based on “stronger relative performance” for the years 2005 to 2013, according to the meeting agenda. But board member Nilza Serrano expressed no confidence in Portfolio’s numbers, saying that the firm had misled the board by excluding a major client, the Pennsylvania Public Schools Employees Retirement System, from its performance results.

Full story: LACERS scraps PE consultant search, accuses incumbent of fudging numbers

Published by Money Management Report

NYC retirement system reports growth, but warns that good times may not last

The $175bn New York City Retirement Systems reported higher-than expected growth in the beginning of 2017, but its CIO warned against complacency, saying that some of the factors driving that growth are not sustainable in the long run.

The funds’ fiscal year performance to date was in the nine to 11% range, well above the city’s assumed 7% rate of return, CIO Scott Evans said at the funds’ quarterly public meeting. But with much of the growth driven by “ebullient” markets, the funds remain in a “dicey situation, fraught with risk,” he said.

“This is not normal – rates are low, valuations are extremely high, and volatility is extremely low,” Evans said. “This is as good as it gets, so we should not be complacent. We should be sure to rebalance frequently to keep our portfolio taut, because we’re going to get hit by a wave sooner or later. We can’t predict when it will come.”

The systems are concerned about the level of quantitative easing, which has been high ever since the 2008 financial crisis, mixed market signals stemming from low Treasury yields and high stock prices, and uncertainty around the possibility that President Donald Trump will appoint a new U.S. Federal Reserve chair with different policies than current chair Janet Yellen.

Read the full story: NYC retirement system reports growth, but warns that good times may not last

Published by Money Management Report/Pageant Media.

Camino Day 32 – Arriving in Santiago

We pass the town of Lavacolla and stop for second breakfast. Traditionally, this is where pilgrims would bathe themselves before entering Santiago itself, and some speculate that the town’s name is a bastardized reference to this (lava = wash, culo = ass, or cola = tail, so the town’s name would roughly translate as Asswipe. I am rooting for this interpretation, since Dorcinda and I have already visited a place denigrated as el culo de Espana on our previous trip).

The town actually does smell like butts, but despite that, there’s a large crowd gathering and we have to fight for seating. We sit outside and are surrounded by people who seem very pleased with themselves. A Spanish man does handstands outside. An old Canadian woman, toes painted mint green, takes this as an invitation to show off, and attempts a handstand of her own. She almost manages, but then pouts, “It’s not a competition. I’m in my 60s.” We can’t help but overhear her conversation, since she’s just at the table next door and is a loud talker. She’s a tour guide, and she mocks the idea of pilgrim suffering, which doesn’t endear her to the three of us. She’s got just four people on her tour, and she books everything ahead for them.

We leave Brenda behind today, since she has a plan to walk into Santiago to meet her brother and best friend from the Netherlands and attend mass. She plans to stay at Monte de Gox Dorcinda and I press on ahead, since we’re nearly there, and have no problem sleeping in the city before doing all of the touristy stuff in the morning.

We walk into Santiago, with all the other pilgrims streaming in around us. The first view of the Cathedral, our destination, is a disappointment – the entire church facade is covered in scaffolding. I had read a lot about the Portico de Gloria, the arch above the entryway, and had talked it up to Dorcinda, since it features medieval instruments played by the Elders of the Apocalypse during the day of judgment. For all the heavy import of their task, they seem to be remarkably casual, tuning and chatting, as if preparing for a mundane concert. I thought that the historical instruments would appeal to the music historian in her, but it turns out that the entire Portico has been disassembled and removed for restoration.

We take a quick look around the Cathedral, and walk in the back entrance to hug the golden statue of Saint James, placed above and behind the altar. There is barely any line  (I remember it being very crowded when I visited with Ian back in my teaching days, but I believe that was a Holy Year, and it was during Easter), so we give a quick hug and speed through to see the relics stored below.

We arrive in Santiago just a bit before the 7:30 pm pilgrim’s mass, and I convince Dorcinda to go. For once, she’s more tired than I am, and would rather skip it and go to mass in the morning.

It’s standing room only, and we’re already tired. The mass includes priests, former pilgrims themselves, from all over – including the U.S.A, El Salvador, Slovakia, and elsewhere – but the service is entirely in Spanish, and I apologize to Dorcinda for dragging her here. The only English spoken during the service is one short prayer, and then a translation of the head priest’s reminder that Communion was reserved for Catholics only.

We are amused by the fact that St. James continues to be hugged by a steady stream of pilgrims and tourists throughout the entire service. The statue has a wide-eyed look on his face, as if he’s perpetually being surprised by huggers sneaking up from behind, or perhaps even being throttled by his well-wishers.  We try to get photos or videos of the hugs, but its too far to get a clear shot.

The offering is collected by an old lady with a velvet sack. Since many of the donations are in 1 or 2 euro coins, there is a steady sound of clink, clink, clink of coins, during the offertory hymn of “Holy, Holy Holy.” It is comical to see her toting around an actual sack of loot that I consider the possibility of robbing her and running out of the Church.

The priests invite Catholics to approach and take communion, and we get in line.

“I’m not letting those Catholics deny me the host of Christ!” she says, indignant.

The announcement of communion was accompanied by a little bell that sounded like an old-fashioned call to dinner. I rub my tummy. I am pretty hungry actually.

We are given wafers by the American priest, but no wine.

“No wine?” I say.

“Those Catholics sure are cheap,” Dorcinda says.

“I thought that’s what we were chipping in for!”

Dad would be proud of our irreverence, Dorcinda says. When another group of attendees stands up to join the Communion line, Dorcinda notices.

“When they get up for Communion, let’s steal their seats,” she suggests.

We continue on the topic of money.

“This is not the fanciest church we’ve seen, by far,” Dorcinda complains. “They’re raking in major money, and they didn’t even paint the ceiling.”

“Not a single stained glass window,” I add.

Dorcinda says that Dad might have gone to Communion twice, something he’d been prone to do at times, especially since it was forbidden.

“Not for those nasty crackers,” I say.

“You just called Jesus a nasty cracker!”

I imagine it, ignoring the priest speaking religious Spanish that I can barely understand. If the body of Jesus was actually bread, or crackers. Gingerbread Jesus. “This is my body,” I hear, in the high-pitched cartoon voice of the Gingerbread man from Shrek.

A couple of other people at mass give us odd looks, and we try to suppress our giggling.

And then, at the end of the mass, we are treated to the swinging of the Botafumerio, the massive silver incense burner that is the Cathedral’s signature artifact. We had been warned not to expect it, and were told that it was only used on certain days, or on days when people paid the church to use it. We were either misinformed, or perhaps the collection had been successful enough to warrant it, but either way, it is an unexpected treat.

The censor was originally used to combat the smell (and potential disease) of the pilgrim masses cramming themselves into the cathedral. Nowadays, it’s more of a tourist attraction, but it’s still a hell of a show. The arc goes from left to right for most attendees, and the massive silver plated censor reaches heights of 21 meters and speeds of 68 km/h (Wikipedia). It’s impressive, and after standing in place for a moment, we rush forward for a better view from one of the side chapels. The organist, whose playing has been relatively muted and unadventurous throughout the mass, adds to the sense of the majestic by bursting into a higher volume with a flurry of notes.

Camino Day 29 – Barbadelo to Gonzar

We’re still mad at each other when we stop for breakfast.  Brenda asks how she can help, and I grumpily tell her not to ask me to be positive right now.  Dorcinda cries and says she wants to walk alone. I apologize, as best I can, and try to explain why I was so angry. But we separate for a time.

Dorcinda and I make up over the course of a few hours, and I cry later on. Brenda leaves us alone for a while, walking ahead. I spend most of the day walking alone, trying to take note of all the small things I would not have seen if I were walking and talking.  There are surprisingly few pilgrims on the road, given how many we saw around O Cebreiro. Here are some notes I took along the way:

I sipped water from a leaf in a graveyard gutter

I supped from the shell of a snail

I let my fingers linger on a mossy rock

Trailing through the soft green and wet dew

I saw in a hole in a wall a cylinder of spider web

I wondered if it could catch my breath

It quivered and tried, but my breath went on through

I stepped over the jawbone of a deer

Or perhaps, a cow

Teeth still intact, all in a row, half-buried in the leaves

I saw a cradle of thorns, slung low between two branches

There’s a cross in the woods outside of Portomarin, where we resume walking together. Taking a closer look, Dorcinda knocks down a passport sized photo of a woman. The photo is labeled “Debs. 1982 – 2012.” There are other photos adorning the cross, and we wonder who was first. How common is it for pilgrims to carry the same size photos of their deceased loved ones? How did they know or decide to leave them here, of all the places along the 500 miles we walk?

In the hostel at Gonzar, we meet a woman from Lithuania and I note that we’ve now covered two-thirds of the Baltics. We’ve still got a few days left to meet someone from Latvia to complete the full set. She’s part of a small group that is really booking it to Santiago, walking 40 km days.

Our host offers us home-made wine, which is refreshing enough and remarkably cheap.  The grapes grow right on the hostel itself.

Sleep does not come easily in this hostel, even though its not terribly full.  One man sleeps on some kind of storm blanket in place of a sleeping bag. It’s basically shiny yellow wrapping paper, and it crinkles obscenely with the slightest movement.

Camino Day 28 – Triacastela to Barbadelo

Near the end of the day, we pass Sarria, which is just over 100 km to Santiago. It’s the final starting point for pilgrims who want to get their pilgrimage certified by the church in Santiago, so the road becomes significantly more crowded from here on out. We allow ourselves a few unkind thoughts about these new pilgrims, and congratulate ourselves for having come so much further than they did. But our attitudes quickly change to acceptance in the view of far more vehement expressions of unwelcome.  I guess sometimes the Camino makes you MORE of a judgmental jerk and less open minded.

There’s more graffiti on this stretch of the Camino than I’ve seen before, most of its the same hippy-dippy wannabe spiritual stuff we’ve seen before, but it’s peppered with surprising hostility to the new arrivals. “Hey tourigino! Jesus didn’t start in Sarria!” One graffiti’d way marker declares, with an agreement written right below “Absolutely true!!” and another seeming agreement “Yeah. Fuck pimpins.”  Never mind the fact that, Jesus reportedly died about 1000 years before people started walking this way to honor one of his disciples. One day from Santiago, I’m proud of what Dorcinda and I have done, but I know that many people have walked further, or, through no fault of their own, could only walk a much shorter road.

Before dinner, we try to make an effort to be more social with the other pilgrims in our hostel, which include an older man we met in O Cebreiro and a woman from Toronto who is limping badly. We’re mindful of becoming a little more insular and cliqu-ish than we were at the start of the road, since we’ve been walking so long with Brenda, and seem to have little in common with most of the pilgrims who have just started out. There’s also a younger German man and a man who speaks only French, and the German attempts to translate for him. We talk about where we started, and Brenda is encouraged to hear that many of the other pilgrims have come, like us, from St. Jean, or other places beyond O Cebreiro.

At dinner, Dorcinda and I fight and I go to bed angry.  It’s the dumbest thing really, but it casts a pall over the whole end of the trip. I once again take a chance on some food I don’t know, dessert this time, and get some kind of bland pudding. Dorcinda asks to taste it, and when she does, she bursts out laughing, drawing everyone’s attention. It’s so terrible she says. I say its not that bad, and I mean it – I am happy to take a chance on something new, without judging good or bad right away. Just to experience. That’s part of the whole trip for me. But she offers to give me some of her dessert, saying I can’t possibly keep eating what I ordered. I hate that everyone’s looking at me, that I’m being made an object of ridicule and pity, so I snap at her. Stop talking to me. It’s awkward and does little to relieve the tension of unwanted attention.

Camino Day 27 – O Cebreiro to Triacastela

We return to Mathilde’s bar for breakfast.  It is cold and rainy again, but we must press on.

It’s 42 degrees Fahrenheit, and we’ve now seen three days of rain. Again, we sing to ward off the rain, but Dorcinda and Brenda do most of the singing, including  “The sun will come out, tomorrow,” and “99 Bottles of Beer on the Wall.” All donativo! Dorcinda jokes.

We walk separately for a while, and for once, I race ahead of Dorcinda and Brenda on a downhill route. I’ve got my headphones in and let the music push my pace.

Near Fonfria, about halfway through the day’s itinerary, I stop at a gnarled old tree that has a sign with tourist information. The tree, a chestnut, is 800 years old, making it as old as Santiago’s Cathedral and almost as old as the pilgrimage tradition itself. There’s a bit of information about chestnuts being an important part of Castanyeda or Magosto celebrations for All Saints Day. I wait for Dorcinda and Brenda to catch up, so we can pose for a picture hugging the tree together. Dorcinda and Brenda ask what song was playing when I picked up my pace and took off, but I don’t tell them.

We continue to pass the time by reading poems from the free “world poetry” app we downloaded along the way, and Dorcinda finds some good ones.  What the Hyena Said by Lindsay, Vachel.

We try to revive the dumb riddle game with Brenda, and I come up with a hit: what Spanish food, is a mermaid with no friends? Mer-loser! Brenda is endlessly entertained.

At dinner in Triacastela, I take a chance on Callos a la Gallega as a starter, but it’s gross. It’s fatty greasy stew with random pork bits thrown in. The waiter notices that I barely touch it, and he takes pity on me without any request, bringing me the more wholesome Caldo Gallego as a replacement free of charge.