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tv   [untitled]    April 29, 2015 4:00am-4:31am PDT

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to $0.02 per share it will be inexpensive but if you sill low priced share where you'll sell a lot of shares more money involved. >> just estimate please. i can't since i don't know how many shares. >> in terms of the first of all, the analysis i like very much the analysis was good in terms of going through the factors and the sensitivities we all know obviously that this is very much sensitive to inflation that's itself big deal and short story in terms of the s&p 500 the round numbers. >> that's correct it has been as high as a quarter background in 1980 but. >> let's say we sold for the sake of discussion $100 million in s&p 500 and in favor of this
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we would have 70 percent in energy stock to $8 million $100 million on the bar side in essence $8 million in energy stock. >> it wouldn't be that high we will not be selling security. >> do you have a ball park number. >> we would sell roughly $2 million in energy stoke. >> something like that $2 million. >> that's a substantive issue in terms of selling small unanimously announces of energy stokes with a divestment approach. >> let's see let me tell you it is obviously a concern i can hear from the speakers it
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there's a lot of frustration from the speakers in terms of waiting for the investments along for the pension fund but to sell 2 percent of energy stock didn't ring true in terms of the true investment particularly we bought a lot of stokes in the portfolio so we have a public and private section to invest $100 million in energy related investments within the last few months. >> we did commissioner if you look at pages and no, no the one we did that was recorded you know it was recorded let me clarify that is an important point in private session we voted to invest $100 million in the energy investment that was disclosed in the board which is pubically. >> what was the name of the
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investment specifically that's what was the name of that investment. >> mr. wayne do you remember. >> i believe. >> okay. >> so it i want to be clear that was and these were the contenders that members raised in terms of vote for follows fuels it's a higher magnitude one hundred million dollars in a private investment to purchase those in terms of the dollars amount to sell $2 million in energy stoke to me that's the substance of the spirit of divest it is to sell energy stoke because the gloshl aspect ms. a substantive issue.
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>> i think that's enough. >> any other comments seeing the chair will entertain a motion i was going to ask a couple of questions, sir. >> absolutely. >> please talk about the inflation benefits of being invested in the investment sector probably will be helpful for the members of the public to hear that. >> the analysis i went through an attempt to look at when the rate of inflation was increasing not necessary it was there but whether or not it would be a benefit to owning stocks in my analysis versus the regular s&p 500 that when inflation was in determining whether you had
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imperfect knowledge inflation was going up in a year or lack there was a consistent ability to be overweight the s&p 500 energy sectors versus the s&p 500 itself 0 so there was a consistent trend i i believe that the analysis looking at correlation shows the same thing those analyze were done individually but there is a consistent rising inflation is consistent with the rising energy prices. >> so in summary if you knew we were in a inflationary investment you want our money in the investment. >> given the choice of s&p 500 and the other correct. >> i look at the memorandum you have your take the opportunity the mc inch heard talk about the
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s&p 500 are we the proposal that you have for excuse me. the recommendation that you have your comfortable with we're talking about the mc i equity not the s&p 500 correct. >> we did not state the motion a specific benchmark x fols fuel or low carbon ridicules has not issued a statement they're very, very young in the sense of mc i's came out in october so we want to talk to the vendor of the benchmark to discover how the methodologies are being used it is different through the benchmarks we'll come back with a index vendor but discussions of the various asset management
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firms again as noted in the memo the number of low carbon or x fossil fuel fuel under management is very, very low so this was actually a surprise in the b t fs state street as the capacity but not the assets this is a lucid hear area that is why the proposals is the way it is. >> do you have any opinions on the economy what inflation might look like over the next several years. >> my view is that there is a problem with the demand worldwide and that growth is under performing revisions are
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over the last year's declining down and that you know that's the reason why energy or excuse me. inflation has remained muted there's in the important factor regarding inflation how inflation is constituted how it is recorded a term called the adjusts enables the government to determine how much of an increase in the permits of a good is contributed to the improvement and the quality of it and the rest of increase is due to inflation and the adjustments are material they constitute about half of the goods in the inflation basket and half of the subject are to the adjusts so there's a
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rational that inflation is constantly under recorded my view is i'm not an expert on inflation but so i think that inflation is probably likely to remain immunizing low we've had 6 years of aggressive policy and yet we still had no inflation but that said that's my view there's also an error term it is a portfolio of balanced risks that includes inflationary and deflationy concerns lastly i'll ask leslie do you want to contribute. >> the long term it is longer
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than than your horizon in your question inflation and exceptions have continued to fall when we look at the tips market and long term inflation perpetrated e exempted around 2 percent it is running lower we'll concur that inflation is like returning. >> commissioner if i can add i appreciate the question of my view or an individual verify but more importantly this is looking at what our team says about inflation and our actuary report we vote on what we anticipate inflation to be i believe the number was 3 and a half percent in the actuaries report so i think this is a better way to look at it rather than asking mr. corkers personal opinion or
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my opinion we've honed in on the number we've voted on could we ask what that number it i think it is - 3 and three-quarters. >> yeah. i think this is helpful i'll note there are members of this board including commissioner meiberger thinks it's grossly underestimated people believe that fell it is what inflation looks like going forward and other question we divest in those stokes we lose our ability to vote on how the company we give up our ability to vote proxy because we're not a stakeholder. >> this is under level two of
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the social policy it is not an action taken by the board nor it staff recommending we devest of our public holder in the fossil fuel companies the source will be selling off public intricacy that will be determined at the time, we need to raise the cash to divest and commissioner meiberger said the purpose was to devest we've not gone to level 3 as a board we're trying to go forward and you know at the level two find an alternative way of investing our money to provide the equivalent return and risk expectation as money we currently would have invested in a s&p 500 including the follows fuels but we'll be targeting to sell off and the
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public equity portfolio wouldn't be targeted to the fossil fuel companies per say a different analysis. >> i would agree with you on that. >> so the answer is we would sell off a portion of our portfolio that currently doesn't have the fossil fuel investment. >> there's no restriction or direction we should on sell off our holding in fossil fuel for the investment. >> for example commissioner a likely candidate is the existing index account so as we sell that and if we bought this we'll simply oppose fewer shares of the selected companies. >> which would defossil fuel
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companies. >> we'll not own zero shares but fewer shares. >> the answer as i understand yes own less shares of fossil fuel companies we have less influence on the stakeholders actions. >> the de facto; right? here's how i view it we're working against ourselves if we decide to vote level 2 as a board but the same time holding the follows fuels shares we're working against each other i'll leave it at that and if there's a motion i'll speak to that. >> commissioner bridges. >> i'd like to thank you thong the folks for the proposal i agree there are having very few companies that offer that in
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that arena the few you've mend the track record is limited because there's few investments going in i'll courage you on the margins that haven't build the infrastructure to attract the investors i'll caution you but at the same time the approach you're taking to review it and the companies that operate currently are the ones you should track and look for additionally back to commissioner stansbury point i'll assume your ex tracking from the accounts therefore you're not losing in terms of felt revenue streams there's no losses in revenue per say. >> you're moving from one index to another. >> hates the likely somewhere it will go through.
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>> any other questions? commissioner driscoll >> and that we use a longer than one in considering when to increase or decrease money in equities fortunate or unfortunately, it is the largest commodities we're imposed to the commodities are down the level 2 policy but who to set up a fund to start some form of divestment what's the cost no effect on the total portfolio when you did this did you net out the fees not to pay on the $100 million from the managers. >> i did not. >> it maybe a little bit less
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33 or 10 on this report. >> if for example, the fund were removed from the s&p 500 we'll pay a base point for the management fund. >> that may not be significant but paying attention it is we're looking for pennies i'm worried about the world war announced this morning i assume that the price of oil will go down but the members of the public are concerned about the globally that is 50 invincible protons thank you, again for your report i want to confirm you believe that the effect on the application of the portfolio is minimal. >> i do. >> in terms of the would this have a material impact on the
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long term strategic policy yes. >> as to where the money is moved from any want to see and immaterial but. >> great carolyn to entertain a motion. >> is there a second to that. >> second. >> open up for public comment on item number 4. >> hi, i'm jack a retiree i've people to you before on this topic actually want to add one thing from a couple of weeks ago i think a lot of us when we speak to you we're not financial experts but i'm a transportation expert i've got thirty years as a transportation engineer and
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planner i can say to the lastly california plan developed by caltrain makes projections on the oil in california and i'll give the clagsdz you'll see the park the oil we're using with the blue part is the diesel fuel obviously everything we use for transportation is diesel by 2014 or 2050 it is all going to be ohio fuel sepz sells for electric vehicles those are the projections of caltrain and they're not saying people will stop driving this is the map of what their showing and the projections right now the blue is the internal come bus that is everybody that drives but look
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at what is the no combustion vehicles like bio vehicles and hygiene vehicles this is the future when you look at past performance in fossil fuel remember where we're going they don't have a future we should get out it it as fast as we can (clapping) (calling names.) good afternoon bret. >> good afternoon good to see everybody in the background section of the agenda item in the social investment it states it the board can consider the programs that benefit the participants or participate in the equities provided the respect returns meets equal alternatives for the standard to
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which you should extend this based on similarity with that said this report can have out-performed one and 3 and 5 year period awhile remaining with the sequesterer metrics those have been circulated as presented to this board in the closed session on june 18th before the base oil drop reports that the anecdotal evidence for more recent time period that x fossil fuel may show expedites returns on the forward base it is important that the board ask the question that undermines the affordable unit idol information it is different from 20 or 50 years ago competitive alternatives are now the way
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climate change is now another dangers levels and on carbon is a low thing being a long term investor you shouldn't basz base our information on a long time ago ago. >> hello board members my name is it jed holts man i'm representing follows free san francisco go good to see you all we spoke about that last month and support i'd like to see specific allocation today following the next item but i understand that more work needs to be done and i look forward to that being done i do thank staff
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for the analysis in this report we agree with most of the finding but towards the end there's reasons given as to why we feel that $100 million is the most they'll feel comfortable recommend as we've heard those largely relate to how things happen and things will be that way again, we should act that way i want to draw an massage to the horse-and-buggy industry 5 years before it collapsed people said the hours and buggy industry will collapse how did that happen and the called water system in the drought it is very, very recently that all of a sudden the projections and dramatic reductions because this is how our world works we cross
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a tipping point things change they don't happy in gradual credential ways i'm sure you remember economics 101 the micro there were under graduates baikd but the finite resources as fine as follows fuels are things don't stay the same over time in this case it is dirtier as capital costs increases it is harder and harder to get at deposits you know we see a dramatic change in the market assuming that the market is going to revert over the long term there's no data given that is almost like a rule of thuven not guiding million dollars of investment and it was pointed out out. >> to sessions in 2014 losses to our follow fuels from gains to index funds
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you could have 1r6dz one hundred 4 to one hundred and 61 million dollars that the funds lost material losses investing in follows fuels to commissioner stansbury point our staff our managers are selling follows fuels the number of proxy votes are changing everyday and there's no provision of selling here the argument of decreasing against yourselves is a red herring we need to support $500 million. >> welcome jeremy. >> good afternoon legislative add to supervisor avalos he couldn't be here first of all, thank the staff for the report
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those are questions the pension board and fiduciaries across the countries are asking that is a groundbreaking work so fully support you taking the steps making investment in follows free i want to add a few comments about the staff report or the staff reports where it says that oil companies maybe making structural improvements we've not seen evidence in fact the top companies sold off their investments it didn't seem it is a bold statement for the keypads to say they're committed to the fossil fuel long term so we don't see the shift and about the section report that mentioned the price of earning ratios of energy companies at a discount accordingly to the historical levels i think this
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is a result of the market and the future market and the future perform and as mr. fetching man said you'll find at the race track slow horses are not a good investment those are capable low risk investments and with the future risks of the carbon bubble we urge to make a hundred million dollars investment and continue to look to expand those investments as the report it is a relatively small and save and pursuant investment going forward and as the commissioners concerns about inflation it is a real concern i'd like to see the traditional analysis of the henlz that not going to be
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risky. >> thank you. any other members of the public that wish to speak welcome martha. >> thank you for looking at the move to invest $100 million to follows free funds as a retiree i support that move i share the concern about my pension i'm sure you're aware of our members live check to check we don't take this lighting, however, we sought a very well run pension in its combiert we need to do this i want to see transparency let's decide on the plan quickly and make the investment and report every quarter about how this follows free fund is doing that basically awe lays any fears of it not being a good investment i
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support the motor let's be transparent on where it goes and how it's doing thank you. >> thank you seeing no other speakers i'll close. commissioner >> questions? >> i think the staff could look go again, a way to take the most egregious violators in our minds the follows fuels out of the inspire portfolio and what the impact would be i know that jeremy has done that in his valid dictation and maybe contact them and see if we can see their performances he's a big believer that in the lutheran you'll have a better performance their people their
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comments are valid we're doing $100 million but in reality if we could get the worse coal companies in the things we think will not have great value in the future will be a good test a good part research to do that i know that people are doing that that's one and two maybe we also can target venture capital, private equity in renewables i know that funds are doing this they're successful granted they're not huge funds but i think it would be good to keep looking for that and you know it's hard for us we don't have a lot of money to put to work but i think we can find them if we put that to task. >> i think that is a great idea


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