Jeff Smith 2 p.m., Dec. 18
Illinois teachers fund axes two SD money managers
The severely ailing Teachers' Retirement System of the State of Illinois has dropped two San Diego money managers. According to an announcement last Friday, the fund dropped Brandes Investment Partners, which was managing $655 million in international stocks, and Denali Advisors, which managed $140 million in domestic stocks.
Assets under management at Brandes have plunged from more than $100 billion in 2005 to $29.8 billion, as the Reader has steadily reported. I have heard of a recent top management shakeup, but haven't been able to confirm it; Brandes Investment has never responded to my queries since I began reporting on the stark decline. There were layoffs late last year. Charles Brandes, founder of the firm, and his young (third) wife Tanya are hot on the social circuit. He built a 54,000 square foot home on 30 Rancho Santa Fe acres, said to be worth as much as $60 million, a figure he disputes. He has gone through an ugly divorce from his second wife.
Denali Advisors says it is the largest Native American-owned asset management firm in the country. Co-founder Robert Snigaroff is an Alaskan Native of the Aleut Tribe. According to the publication Pensions & Investments, the Illinois teachers fund terminated Denali because the $140 million represented 20% of Denali's assets, and that made the Illinois fund uncomfortable. Michael Munson, co-founder of Denali, says the reports are true. Denali once managed as much as $250 million of the Illinois funds. He says when Denali lost other accounts, Illinois got to 20% of its assets. Denali now has $560 million under management.
The Illinois teachers' fund is only 42.1% funded. A recent report co-chaired by former Federal Reserve Chairman Paul Volcker concluded that Illinois's pensions are "destined for insolvency" unless the state changes politicized budget processes. Pension-wise, Illinois is in the worst shape of any state, the report's authors concluded.
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