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Showing posts from 2019

Doug Ford’s Gravy Train Hits IMCO?

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Ontario's New Democrats are accusing Finance Minister Rod Phillips of political patronage:
In one of his first acts as Finance Minister, Rod Phillips appointed one of his major donors and long-time business partner Neil Selfe to the Investment Management Corporation of Ontario (IMCO). Another long-time Phillips business associate, Brian Gibson, was also quietly appointed to the IMCO board on June 20.

Official Opposition NDP MPP Taras Natyshak said Doug Ford and the Conservatives are continuing to rubber-stamp patronage appointments of close friends and insiders to key roles. That’s why Natyshak and the NDP are calling on these and all recent Conservative appointees to appear before the Standing Committee on Government Agencies to face questions about potential conflicts of interest, and their qualifications.

“It’s troubling that Phillips’ first move as Ontario’s Finance Minister was to hand out a couple tickets on Doug Ford’s gravy train, rather than get to work on the things that…

HOOPP's Smartest Guy in the Room?

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Barbara Shecter of the National Post reports on the smartest guy in the room: How a pension guru worked his magic, beat the market and saved Home Capital:
There are seminal moments in any career and Jim Keohane’s is a doozy. He knew something was wrong when his lowball offer for Canadian Pacific Railway shares, lobbed in at $1 below the asking price, was instantly accepted.

It was October 1987 and by the time the shares he had traded overseas opened on the Toronto Stock Exchange hours later — on what would become known as Black Monday — they had dropped a further $5 per share.

Keohane, who will step down next year after a widely praised 20-year run as chief investment officer and then chief executive of the $79-billion Healthcare of Ontario Pension Plan (HOOPP), recalls that his loss on that day’s trade was painful as markets historically tumbled to a depth and at a speed few thought possible, but it was far from the worst thing that happened.

The firm where he worked, Wood Gundy &am…

US Slowdown or Recession?

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This morning, I had a chance to speak with Chun Wang, a portfolio manager who produces great research at the Leuthold Group. Chun just wrote a Macro Monitor comment, Slowdown Or Recession? Confidence Is Key, where he outlines these main points:
The dovish pivot of global central banks is part of the reason behind the impressive rate decline, but the recent string of sub-par economic numbers also helped to push global rates lower. The question is, “How low can rates go?” Over the medium term, it boils down to a call on recession. We present our preferred recession indicators in a dashboard and compare their patterns during a recession versus during a slowdown. A traffic-light system is used to indicate the current status (green = no recession). Right now, there are five green lights and six yellow lights. That means we are still in the slowdown camp, not the recession camp (yet).

Risk Aversion Index: Stayed On “Higher Risk” Signal

While the low inflation, slow growth (but no recession…

AIMCo Gets Creative on Real Assets?

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Kevin Orland of Bloomberg reports on how competition for real assets is forcing the Alberta Investment Management Corporation (AIMCo) to get creative in its approach:
Alberta Investment Management Corp. is being forced to get creative in its hunt for real assets like office buildings, timberland and wind-power installations as rival pension-fund managers pile into the increasingly popular sector.

Chief Executive Officer Kevin Uebelein, 59, says the manager for 31 Alberta pension, endowment and government funds is looking to buy into companies that have strong existing assets and top management teams that can build on those bases — a practice he refers to as platform investing — rather than just buying into existing projects or those under development. That strategy is necessary as rivals shift more of their funds into illiquid assets, threatening to bid up prices and drive down returns, Uebelein said.

“There are too many dollars chasing too few projects,” Uebelein said in an interview.…

Will Leverage Save the Canada Model?

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Gareth Gore of Thompson Reuter's International Financial Review reports that pension giants are adding leverage as 30-year-old Canadian model flounders:
In the late 1980s, the Ontario government set up a task force to tackle what it saw as a ticking financial time bomb. After decades of under-funding, it was worried that the pensions of teachers and other public servants might one day place an insurmountable burden on state finances. The pay-as-you-go model, with workers contributing just 1% of their salaries and the state filling any shortfalls, was seen as unsustainable.

The task force recommended a complete overhaul of the system, proposing that public-sector pensions be spun off and managed independently by teams of professional investors. Though controversial, in 1990 the state launched the first such fund – the Ontario Teachers’ Pension Plan – that rapidly became a template for other public-sector pension schemes not just in Ontario but across the whole of Canada.

The Canada…

Jo Taylor Named Ontario Teachers' Next CEO

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The Ontario Teachers’ Pension Plan just named Jo Taylor President and CEO effective January 1, 2020, succeeding Ron Mock, who retires at year-end:
Ontario Teachers’ Pension Plan (Ontario Teachers’) is pleased to announce the appointment of Jo Taylor as its new President and CEO, effective January 1, 2020. Mr. Taylor, currently Executive Managing Director, Global Development, will succeed Ron Mock, who is retiring on December 31, 2019 after almost two decades at Ontario Teachers’.

“We selected Jo because he will be an excellent driver of the Ontario Teachers’ brand, and for his ability to advance the organization’s global effectiveness and build for the future,” said Ontario Teachers’ Board Chair Steve McGirr. “We believe that Jo will enhance the total-fund approach, address the challenges of today’s investment environment, and uphold the tradition of successfully delivering on the pension promise for our members. He is also known for building high-performing, multicultural teams globa…

Too Much Beta Dragging Down Japan, Norway?

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Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, on Friday reported a profit of 9.1 trillion yen ($84.4 billion) in January-March, swinging from a record loss in the prior quarter, thanks to an upturn in stock markets:
The fund, which managed 159.2 trillion yen of assets as of end-March, had quarterly profits of 2.7 trillion yen on domestic stocks and 5.1 trillion yen on foreign equities, its earnings results showed.

Japan's Nikkei stock average rose 8.4% during the quarter, boosted by speculation the U.S. Federal Reserve's next policy move would be an interest rate cut.

The GPIF had suffered a record 14.8 trillion yen loss in the three months ended in December as worries about the escalating U.S.-China trade war battered global markets.

Given the ultra low interest rate environment in Japan, the fund has retreated from unprofitable domestic bonds and pushed into foreign assets.

It had 26.3% of its portfolio in Japanese bonds as of end-Ma…