Morning Agenda: Investors Reflect on Calpers Move

INVESTORS REFLECT ON CALPERS MOVE | The California Public Employees’ Retirement System, the nation’s largest pension fund, has long been a trendsetter among public pension plans. So when Calpers said on Monday that it would eliminate all $4 billion of its hedge fund investments over the next year, the industry took note, Mary Williams Walsh and Alexandra Stevenson report in DealBook. The reasons for its decision — that hedge funds can just seem too complicated and costly — also resonate with many public workers, retirees and the plans’ trustees.

“A lot of the employees’ labor unions will applaud this,” said Christopher J. Ailman, chief investment officer of California’s big pension fund for teachers. His crosstown rival, Ted Eliopoulos, chief investment officer at Calpers, said he expected the decision to have a ripple effect. “We certainly had a very thoughtful and deep conversation with our peers in the institutional investor network, as well as a wide variety of talented active external managers, and so we considered those opinions in forming our own conclusion,” Mr. Eliopoulos said.

While some public plans have added hedge funds to their portfolios in recent years, those investments generally have not performed as well as plain old stocks since about 2009. “I think the industry is changing. There is less tolerance for underperformance in an environment when you have a relative huge outperformance with more liquid opportunities like an S.&P.-500 index fund,” said Elizabeth R. Hilpman, chief investment officer at Barlow Partners.

But other public pension officials said they were committed to investing with hedge funds no matter what Calpers did. “In theory, you get smart people” at hedge funds, said Brendan Thomas Byrne Jr., vice chairman of New Jersey’s State Investment Council, the body responsible for investing that state’s pension assets. “And you get a degree of flexibility that you wouldn’t get in certain other asset classes.”

RADIOSHACK’S HISTORY OF MISSES | RadioShack, which announced last week that it might be forced to file for bankruptcy, has “missed almost every opportunity to be the center of the technology revolution,” Steven Davidoff Solomon writes in the Deal Professor column. “This is the retailer that sat at the heart of the electronics revolution and had many paths to glory, most of which it took. Yet, in what should be a Harvard Business School case study, it executed all of them badly.”

“RadioShack could have been Best Buy. It could have been Amazon. It could have become Dell. The paths that RadioShack could have taken are numerous. But instead of choosing one, it chose them all, walking away from its place as a hobbyist’s dream,” Mr. Solomon writes. “So what can we learn? RadioShack suffered from poor, often overpaid, leadership, which could not focus on a single plan and then was left grasping for a rescue strategy.”

ADVOCATING FOR VICTIMS OF PREPAID-CARD FRAUD | Emily J. Henn, a litigation partner at a prominent law firm, typically finds herself defending corporations. But she was thrust into the unexpected role of consumer advocate when she began receiving calls from victims of fraudsters who were using her name in their scheme, DealBook’s Matthew Goldstein reports. The victims were asked to make cash payments using a prepaid debit card to pay taxes owed on a fictitious lottery prize. Ms. Henn said she was aware of at least a half-dozen victims who paid money to the unknown perpetrators but never received any lottery prize money.

The lottery ruse is among a number of fraudulent schemes involving a MoneyPak, a product sold by the Green Dot Corporation, Mr. Goldstein writes. These prepaid debit cards are a convenient way for people without access to a traditional bank account to shop online, but the product has also been a magnet for fraud that has been used to dupe consumers out of tens of millions of dollars. That’s because the transfers of money are often hard to trace.

ON THE AGENDA | The Federal Reserve’s policy-making committee announces its intentions at 2 p.m. The technology investor Peter Thiel is on CNBC at 7 a.m. William H. Gross, the Pimco founder, is on CNBC at 1:55 p.m. Alibaba takes its road show to London. General Mills and FedEx report earnings before the market opens.

IPHONE 6 REVIEWED | “The best part of the new phones is actually the new software inside,” Molly Wood of The New York Times writes. “Because of the software, it’s hard to see many iPhone fans straying from Apple, even if they don’t buy new iPhones immediately.”

| Contact: @williamalden | E-mail

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