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HomeMy WebLinkAboutMinutes 07-23-2008 ST. LUCIE COUNTY INVESTMENT COMMITTEE _________________________________________________________________ Date: July 23, 2008 Convened: 8:15 a.m. Tape: 1 Adjourned: 9:10 a.m. _________________________________________________________________ Present: Howard Conklin, Chairman; Todd Bevan; Mike Dillman; Edwin M. Fry, Jr., Clerk of Circuit Court; Shai Francis, Finance Director; Lauri Heistermann, Deputy Clerk Absent: Chris Fogal, excused; T.J. Buckley, excused ________________________________________________________________ Due to equipment failure the entire conversation of the meeting may not be reflected in the minutes. Tape 1 I MINUTES The meeting was opened by Howard Conklin, Chairman. The minutes from the April 23, 2008 meeting were reviewed. It was moved by Todd Bevan and seconded by Howard Conklin to approve the minutes from the April 23, 2008 meeting; and upon roll call motion carried unanimously. II. PRESENTATION OF QUARTERLY INVESTMENT REPORT The Clerk of Circuit Court presented the quarterly investment report for St. Lucie County for June 30, 2008. The Clerk of Circuit Court reviewed the investment schedule as of June 30, 2008. The Clerk of Circuit Court stated that the County has $61,089,271 in the State Board of Administration Fund A and $6,962,151 in Fund B. He advised the Committee that we were able to do an additional draw down from Fund B. He informed the Committee that at this point there is about 6.6 million dollars in the Fund B account. The Clerk of Circuit Court informed the Committee that the Florida Local Government Investment Trust initial investment was 38 million dollars. He informed the Committee that they have experienced unrealized loses in the portfolio. 1 He informed the Committee that this had occurred before, where the market value of the portfolio declined. He stated that they do a good job of repositioning due to changes in the market. The Clerk of Circuit Court reviewed the US Treasuries with the Committee. He stated that there was $95,461,278 in treasuries. He stated that these were the two year treasury notes that the County had purchased. In addition this also includes any T-notes bought by the three Money Managers. The Clerk of Circuit Court reviewed the Agencies with the Committee. He stated that there was $40,435,170 in the Agencies. He informed the Committee that these were agencies that the Money Managers purchased. The Clerk of Circuit Court reviewed the Money Market account with the Committee. He stated that there was $108,668,814 in the Money Market. He informed the Committee that this was the Money Market that the County was managing. He stated that there are three primary funds. He informed the Committee that we were looking at adding a fourth fund. He stated that these were all acquired by J.P. Morgan, since they bought Bear Stearn. He informed the Committee that the contact person for the County had been monitoring the funds very closely. He informed the Committee that the contact person at J.P. Morgan had made recommendations for changes in the past. Todd Bevan asked what the portfolio consisted of. The Clerk of Circuit Court stated that they were all money market funds with restrictions. Howard Conklin asked if they were showing any negative returns. The Clerk of Circuit Court stated no. Howard Conklin asked that the US Agencies be broken out by the Money Managers portion and non Money Managers portion so that the Committee could check the progress of the Money Mangers. Todd Bevan asked if the Money Managers paid out the earnings. The Clerk of Circuit Court stated that the Money Managers retain the earnings. Todd Bevan stated that it should be fairly easy to compare their performance. 2 The Clerk of Circuit Court stated that Capital Guardian’s initial cost was 34.8 million dollars and they were at 34.6 million dollars. Sawgrass’ initial cost was 34.9 million dollars and they were at 34.7 million dollars. PFM’s initial cost was 34.9 million dollars and they are at 34.7 million dollars. The Clerk of Circuit Court stated that it is pretty restricted on what the Money Managers are allowed to do, since they are bound by the Investment Policy. Todd Bevan asked what the fees were. The Clerk of Circuit stated that it was based on basis points. The Clerk of Circuit Court reviewed the Certificate of Deposits with the Committee. He stated that there was $12,500,000 in Certificate of Deposits. He informed the Committee that some had matured at this point. He stated that the total investments at the end of June was $364,157,711. The market value was $357,099,143 since there is no market value for Fund B. He stated that hopefully by year end we will have a number. He informed the Committee that we went out for bids on Certificates of Deposits. He stated that National City came back with a bid of 100 basis points above the next highest bid. He informed the Committee that he had contacted the State of Florida, because National City is a Qualified Public Depository. He informed the Committee that National City faxed us proof that they were still a Qualified Public Depository. The Clerk of Circuit Court requested that the e-mail, regarding the Qualified Public Depository and how it works, be forwarded to the Investment Committee members. He stated that for a bank to be a Qualified Public Depository they have to apply to the State and the State reviews their financials. Every Qualified Public Depository has to sign an agreement to put up collateral. It can run anywhere from 50% to 125% of the money that is there. He informed the Committee that we had contacted Seacoast National, since all of the County’s money is there. He inquired about their requirement for collateral. He stated that Seacoast National’s requirement for collateral is 50%. He informed the Committee that all Qualified Public Depositories are also required to sign an agreement, which allows their collateral to be liquidated. He stated that there really is no risk. Todd Bevan agreed. Howard Conklin asked how old the certification review process was. The Clerk of Circuit Court stated that the state does monitor it. 3 Todd Bevan stated that it was done quarterly. He also stated that the rating determines the collateral. If the rating falls below a certain level then they would be required to be 100% collateralized. He stated that Public Deposits are safe. He informed the committee that the State of Florida has one of the best Public Deposit programs of any state in the Country. Howard suggested looking into the cost for the subscription for the Weiss Bank Report. He stated that as a subscriber you would have access to each bank. He stated that due to this period of uncertainty, it might be wise to spend a few dollars and be a subscriber for at least a year or two. The Clerk of Circuit Court stated that due to the Qualified Public Deposit program we were going to go ahead with the acquisition of the Certificate of Deposit with National City. He informed the Committee that it is a one year CD for 4 million dollars. The Clerk of Circuit Court reviewed the schedule of SBA Investment activity from the time the pool was split into Fund A and Fund B. As of the end of June there was 68 million dollars with the SBA. He informed the Committee that funds had been transferred from Fund B to Fund A. These funds were pulled out plus the investment earnings of $122,174.75. The Clerk of Circuit Court reviewed the US Treasury Portfolio. He stated that this included all of the Treasuries that were with the three Money Managers. The Clerk of Circuit Court reviewed the US Agency Portfolio. He informed the Committee that the agencies had been acquired by the Money Managers. He informed the Committee that we had received a monthly report from each of the Money Manager. He stated that he would have the Finance Director e-mail them to the Committee members. He stated that the next Investment Committee meeting he would provide the monthly report in the agenda packet. The Clerk of Circuit Court reviewed the Certificate of Deposits with the Committee. He informed the Committee that Gulfstream had been aggressive. He also reviewed the breakdown of the Money Market. He outlined each fund with the Committee. He informed the Committee that Blackrock is the Primary Fund. He informed the Committee that he would be adding on a fourth fund. The Clerk of Circuit reviewed the Treasury Liquidation Analysis with the Committee. He informed the Committee that this outlined all of the five year T-notes that had been purchased. 4 He stated that per his recommendation and the support of the Investment Committee, we sold all of the five year T-notes. He informed the Committee that we ended up with a gain of $1,448,729.32. He informed the Committee that we used the proceeds and an additional $25,500,000 to put into the different Money Market accounts that we were managing. He stated that he wanted to shorten up the portfolio that we were managing. He stated that by liquidating the 5 year t-notes we were able to receive a good return. He informed the Committee that we were going to let the 2 year T-notes mature. III. OPEN ITEMS The Clerk of Circuit Court informed the Committee that the transition with the Money Managers went well. He informed the Committee that we placed 35 million dollars in three separate accounts which go through the safe keeping agent which is US Bank. Any purchase that any one of the Money Managers execute, the security always goes into our safe keeping account with US Bank. He informed the Committee that the Money Managers provide us the information on the trade that they are making, so that we know ahead of time what the trade is and what we will be receiving. US Bank sends us a report every month of all of the activity. The Money Managers give us a report of their activity. Howard Conklin asked when the Money Managers started investing. The Clerk of Circuit Court stated that they started in May. Howard Conklin stated that it is still early in the game. The Clerk of Circuit Court stated that it is difficult to judge how they are doing since they just started investing. He stated that it would probably take about a year to determine their performance. Howard Conklin asked which Money Manager was the most professional and had the most interaction. The Clerk of Circuit Court stated that they all have a different approach. Capital Guardian is very active and they like to trade. He informed the Committee that they had taken some realized losses in addition to un-realized losses. PFM and Sawgrass buy and hold with little activity. Howard Conklin asked if Capital Guardian had given any indication of why they had taken a loss. 5 The Finance Director stated that Capital Guardian had purchased US Treasuries (TIPS) and they liquidated them. The Clerk of Circuit Court stated that this is why we wanted to utilize three different managers. He felt that the benchmark would be how they did compared to the other two managers. Howard Conklin asked how much the State was paying Federated as a fee. The Clerk of Circuit Court stated 3 basis points. Todd Bevan asked if this would go up as the portfolio goes down. He stated that it looked like they probably had some fixed costs. The Clerk of Circuit Court stated that the custody agreement would be somewhat consistent. He stated that Federated is committed to 3 basis points. Howard Conklin asked if exchange traded notes were prohibited by the Investment Policy. He stated that the returns on these notes would be greater than what we may be accruing at this point. The Clerk of Circuit Court stated that he was not familiar with exchange traded notes. Howard Conklin advised the Clerk what exchange traded notes were. The Clerk of Circuit Court stated that if they are corporate notes the Investment Policy would prohibit them, as well as the state guidelines. Howard Conklin asked if we could purchase foreign Certificates of Deposit. The Clerk of Circuit Court stated that they have to be with a Qualified Public Depository. The Clerk of Circuit Court stated that the purpose of utilizing Money Managers was to manage the longer term investments with expertise. He stated that when we get six months down the road, we will ask the Money Managers to provide any recommendations for managing the portfolio. The Clerk of Circuit Court informed the Committee that when he took office, 80% of the County funds were in the SBA. When they froze the SBA there was only 45% of County funds in the SBA for a total of 145 million dollars. Currently there is only 19% of County funds in the SBA for a total of 6.7 million dollars. 6 IV.COMMITTEE COMMENTS/RECOMMENDATIONS Howard Conklin recommended rotating each Money Manager, on a quarterly basis to be available for a telephone conference so they can provide the Committee with a synopsis on what they are looking for as far as the future. It was the consensus of the Committee to schedule Capital Guardian, for a telephone conference, for the next scheduled Investment Committee meeting. Howard Conklin recommended that the Board of County Commissioners be notified of the 1.4 million dollars earned on the 5 year T- notes. The Committee requested that the quarterly FLGIT report be provided to them for each Investment Committee meeting. The Committee requested that the telephone conference with the Money Manager, Capital Guardian, be added to the agenda V.SELECT DATE OF NEXT MEETING The next scheduled Investment Committee meeting is scheduled for October 22, 2008 at 8:05 a.m. VI. ADJOURN There being no further business the meeting was adjourned at 9:10 a.m. 7