August 19, 2002

CalPERS Adds More to the Hedge Fund Roster

SACRAMENTO, Calif. (HedgeWorld.com)--Officials at the California Public Employees' Retirement System tacked on an additional US$242.5 million in commitments to hedge funds.

The US$140 billion pension fund added Apex Capital LLC and Bain Capital to its hedge fund line-up, while making US$175 million in additional commitments to the six hedge fund managers the fund selected earlier this year.

CalPERS allocated US$17.5 million to Apex Capital for its Zaxis Partners LP fund on July 1. The fund's strategy is long biased and will invest in midcap and large-cap stocks, using a growth at a reasonable price investment approach. Investing in 250 to 300 names, about 50% of the fund's holding are on the short side. CalPERS' staff was attracted by the manager's stock picking and portfolio and risk management ability and by the fact that all three of Apex's hedge fund strategies have been profitable in every calendar year of their existence.

A total of US$50 million was allocated to Bain Capital's Brookside Capital Partners fund. A long/short equity fund, Brookside is biased on the long side in which the top-10 positions represent 40% to 50% of the capital. The gross long exposure is 80% to 120%, while the typical short range is 30% to 60%. Brookside is Bain Capitals only hedge fund and has US$2.5 billion in assets already.

CalPERS' staff also allocated additional assets to six existing hedge fund managers. Those follow on investments were: Andor Capital Management, US$40 million; Atticus Capital Management, US$30 million; Evnine-Vaughan Associates, US$30 million; Liberty Square Asset Management, US$15 million; Symphony Asset Management, US$20 million; and Tosca Fund Ltd., US$40 million.

CalPERS hired the first five hedge fund managers in April, while Tosca was chosen in May. (Previous HedgeWorld Story) As of the end of June, CalPERS had authorized $390 million in investments for its hedge fund program, while only US$130 million had been funded, according to board meeting documents.

With the addition of these latest investments, the program now totals US$632.5 million, which brings the public pension fund even closer to the US$1 billion it earmarked to the program back in November 2000. Since then CalPERS has received 189 requests for proposals but has only slated 99 for further review.

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