A top official with Californiaâs public employee pension system admitted this week that its holdings in green energy companies have lost hundreds of millions of dollars. Joseph Dear, the chief investment officer of the California Public Employeesâ Retirement System (CalPERS), called its green energy investments âa noble way to lose money.â The admission came shortly after CalPERS officials voted to divest from high-performing investments in companies that manufacture firearms, fueling criticism that the organizationâs investment decisions are based on political factors, rather than a determination to maximize returns. According to Dear, CalPERSâ $900 million green energy investment fund has produced an annualized return of <u>negative 9.7 percent</u>. âWeâre all familiar with the J-curve in private equity,â Dear said at the Wall Street Journalâs ECO:nomics conference this week. âWell, for CalPERS, clean-tech investing has got an L-curve for âlose.ââ âOur experience is this has been a noble way to lose money,â Dear said. But he added that CalPERS would dial back its green energy holdings given the extensive losses it has produced for Californiaâs public sector retirees. If prices for renewable fuels do not decline, Dear said, âsomebody has to step in and either raise the price of carbon or lower the cost of the alternativesâ to make the industry financially viable. Dearâs comments on green energy suggest political motivations in how CalPERS makes investment decisions, critics say. âOne of the fundamental problems with governments holding large investment portfolios is the potential for those investments to be influenced by politics rather than sound finance strategy,â said Jason Richwine, a senior policy analyst at the Heritage Foundation. Dearâs comments came shortly after CalPERS decided to sell its holdings in major gun manufacturers Smith & Wesson Holding Corp. and Sturm, Ruger & Co. The value of Ruger stock has increased more than five-fold since 2007, when CalPERS began investing in green energy companies. Smith & Wesson stock value has declined by about 16 percent in that time. âInvestment strategies that pursue âsocial goalsâ at the expense of investor (or pensioner and taxpayer) interests are reprehensible,â said Jagadeesh Gokhale, a senior fellow at the Cato Institute. Gokhale said the most troubling aspect of public pension accounting âconcerns insufficient attention to safety of principal, diversification, and especially proper asset-liability matching because state pension benefits are mostly constitutionally (or court) protected.â Those protections can make public pension investment decisions act as de facto subsidies for politically favored industries, Richwine noted. âAdministrators can risk money on ânobleâ investments, all the while knowing that their losses are covered by taxpayers,â Richwine said. âIn that sense, using the pension fund to invest in green energy is a way to subsidize industries without having to go through the awkward process of actually passing legislation.â CalPERSâ green energy-centric investment strategy was the product of its former chief executive, Russell Read, who âsuccessfully transitioned [CalPERS] toward clean technology and environmental investments,â according to a press release from a company he co-founded after leaving CalPERS. Read, who now works for an investment firm in Kuwait, could not be reached for comment. CalPERS did not respond to a request for comment. http://freebeacon.com/nobly-losing-money/
They took lessons from the Obama administration. ************************************************ Obama Campaign Backers and Bundlers Rewarded With Green Grants and Loans -- Where did green-energy money go? Straight to campaign donors. http://www.thedailybeast.com/newswe...ative-energy-programs-became-green-graft.html In March 2011, for example, the GAO examined the first 18 loans that were approved and found that none were properly documented. It also noted that officials âdid not always record the results of analysisâ of these applications. A loan program for electric cars, for example, âlacks performance measures.â No notes were kept during the review process, so it is difficult to determine how loan decisions were made. The GAO further declared that the Department of Energy âhad treated applicants inconsistently in the application review process, favoring some applicants and disadvantaging others.â The Department of Energyâs inspector general, Gregory Friedman, who was not a political appointee, chastised the alternative-energy loan and grant programs for their absence of âsufficient transparency and accountability.â He has testified that contracts have been steered to âfriends and family.â
Well that's what promises of hope change and transparency will get ya. For those naive enough to have believed those lies.