By Michael Norton
STATE HOUSE NEWS SERVICE
The Chicago-based hedge fund hiring Michael Travaglini away from the state pension management team survived the pension fund’s downsizing of its hedge fund portfolio last fall and landed a major asset management contract under his watch, the News Service has learned.
The Pension Reserves Investment Trust Board, chaired by state Treasurer Timothy Cahill, last October axed four hedge fund managers – The Blackstone Group, E.I.M, Strategic Investment Group and Crestline Investors Inc. – as it reduced its investments in hedge funds to 8 percent of all assets, down from 11 percent.
It elected to put all of its $3.2 billion in hedge funds with five investment managers: Arden Asset Management, K2 Funds, Pacific Alternative Asset Management Company, The Rock Creek Group, and Grosvenor Capital Management, the firm Travaglini is now stepping down to join.
Grosvenor emerged from the asset allocation shakeup with $616 million in PRIT funds under management, according to state pension fund documents.
Asking about the timing of Travaglini’s employment talks with Grosvenor, aides to Cahill provided an April 6, 2010 letter to the treasurer and State Ethics Commission in which Travaglini declared his interest in discussing potential employment with Grosvenor and Bank of New York Mellon and cited the state law requiring disclosure in cases where a public employee has “concurrent official dealings” with a firm.
In the letter, Travaglini said, “I am recusing myself from any decisions relating to Grosvenor Capital Management and Bank of New York Mellon during the duration of any discussions regarding prospective employment.”
Travaglini began his tenure as executive director of the pension fund in 2004.
Grosvenor in 2006 won a contract to manage $481 million in pension system assets, according to state Treasury aides, and its investment gains since then have raised the value of fund assets under management to $675 million.
Travaglini will leave the pension fund effective June 11, 2010. The pension fund board, suddenly scrambling for new leadership, will meet a week from today, on June 1, to discuss a “succession plan,” according to plans sketched out in a press release issued Tuesday by Cahill.