RI’s Investment Losses in Raimondo’s Pt. Judith Have Grown 127%
Sunday, October 23, 2016
The state’s loss grew 127 percent over the past year, from a -1.1 rate of return in the period ending December 31, 2015 to a loss of -2.5%. The significant decline in the performance in the fund may indicate it is beginning to crater.
The fund that the state invested in called Point Judith Capital II, has been dismal for retirees, but now Governor Raimondo and her partners in the fund have earned a 2.5% fee annually - rain or shine.
"It's the perfect wealth transfer"
"The fees are 2.5%, the performance was negative 2.5%. It's the perfect wealth transfer -- she's been paid 2.5% and the pension fund lost 2.5%," said Ted Siedle Forbes columnist and Raimondo critic.
“[The performance] is certainly not ideal -- it has underperformed our PE (private equity) benchmark. Ultimately, a decision to extend should be to get the highest price possible for assets,” said Evan England, spokesperson for General Treasurer Seth Magaziner.
Magaziner announced last month he was re-calibrating the state pension fund investments away from Treasurer Raimondo's hedge fund strategy by fifty-percent in the next two years - but his office said it will be taking a wait-and-see approach with Point Judith.
"The ten year Point Judith agreement ends on December 31, 2016, but they have the option for two one-year extensions -- which would be if they had not sold all the assets,” said England.
“This was an agreement entered into in 2006, under a previous administration,” England was sure to note.
Siedle told GoLocal on Friday, “"It was a terrible investment by the state investment commission. Raimondo pitched to the pension in 2006 that they should invest with her because she was the only VC in Rhode Island — she wanted a special allocation.”
Once in Rhode Island, Now Playing in Boston
Shortly after Raimondo was elected Treasurer, her firm moved from Providence to Boston.
"So they invested $5 million, and later, Point Judith moves from Rhode Island to Massachusetts. So she pitched the investment commission that she should get the money being based in Rhode Island... then she kept it as Treasurer, of course," said Siedle.
In June of 2016, Raimondo had named her business partner in Point Judith Capital to one of the top boards in Rhode Island.
David Martirano, a managing partner in the Venture Fund that Raimondo continues to have significant financial interest in, according to state Financial Disclosure form. Martirano was appointed to the Board of the Convention Center.
The appointment was submitted to the State Senator for advice and consent. After GoLocal's repeated inquiries, Raimondo withdrew the nomination of Martirano.
The State’s retirement fund invested in Raimondo’s in 2006 and is scheduled to exit the fund in 2016, but the state may not be out so quickly. Despite the poor performance of Point Judith, the venture fund can hold on for a couple more years.
“The ten year Point Judith agreement ends on December 31, 2016, but they have the option for two one-year extensions -- which would be if they had not sold all the assets,” said England on Friday.
Those two extensions would extend the investment and lock Rhode Island retirees through the next Gubernatorial election in 2018.
As GoLocal reported in April, 2016, the investment return for the previous period for Raimondo's business was dismal:
The Rhode Island pension system has lost 1.1 percent of its investment into a venture capital fund that Governor Gina Raimondo helped create -- and while the state has been losing money, Raimondo continues to earn hundreds of thousands in fees. Regardless of the fund's performance, Raimondo and others in the fund earn 2.5 percent annually.
"Gina Raimondo redefines venture capital 'success.' If doing well for yourself is the definition of success, then Raimondo meets and exceeds the benchmark," said former SEC lawyer and Forbes columnist Edward Siedle, who penned a column under the same verbiage on Wednesday for Forbes.
"As of September 30, the fund performance was .3% positive, which is dismal. I knew we were at the critical moment it would slip into the negative," said Siedle. "That proved correct with these latest numbers released."
About the Fund
The actual fund named "Point Judith Venture Fund II" raised $74,910,000 in 2006 according to SEC documents. Raimondo owns some substantial interest and continues to derive income from the fund. The State of Rhode Island invested $5 million in 2006, according to State Investment Commission.
According to Rhode Island Financial disclosure forms, Raimondo continues to have ownership in the fund and earns her portion of the management fee. And according to a report released this week by the Rhode Island State Investment Commission, the fund's internal rate of return as of December 31, 2015 is -1.1%.
"Is she a successful venture capitalist? No," said Siedle. "Had Rhode Island invested that money in the stock market during that time, they would have gotten close to 7% T-bills would have even been 1.2%."
Related Slideshow: 2016 Raimondo’s Staff Salaries
- RI GOP Blasts Raimondo Administration on Failed $500M IT Project
- RI Pension System’s Top 20 Highest Paid Investment Managers
- RI Loses Money on Point Judith Investment, Raimondo Continues to Make Money
- Bob Whitcomb’s Digital Diary: Raimondo Re-Election, Elorza and Panhandling, and Assage
- RI’s Pension Fund Haunted by 27-Year-Old Real Estate Investment and Legacy of Failure
- INVESTIGATION: Raimondo Investment Program’s Fees Exceed Gains
- SEC Charges RI Pension Investment Firm with Failure to Disclose Conflicts
- INVESTIGATION: Investment Firms Not Sharing Vendor Discounts with RI Pension Fund
- Moore: Time to Overhaul the State Investment Commission
- Magaziner Offers Nominations for State Investment Commission, State Retirement Board
- INFOGRAPHIC: RI Ties to Wall St. Exec Arrested for $95M in Fake Investments
- The Highest Paid Investment Firms in RI Pension System
- Details Emerging About How CA Developer Robbins Got $3.6M From Commerce, Raimondo
- Governor Raimondo Joins ABC6’s “In The Arena”
- UPDATED: Raimondo’s Chief of Staff Smiley Launches Late Night Crude Tweet, Previous Staffer Resigned
- Legislative Leaders Call for Raimondo to Halt $3.6M to Developer Robbins
- Raimondo’s Campaign Kick-Off Space Donated by Developer Who Received $3.6M
- Growing Allegations About Developer that Raimondo and Commerce Just Gave $3.6M
- This Week Was Raimondo’s Worst Week as Governor and It Has Long Term Implications
- Closed Baker Says Robbins is “Morally Bankrupt” and Opposes Raimondo Giving Him $3.6M
- NEW: Forbes’ Siedle Launches Crowdfunding Site to Investigate Pensions
- NEW: RI Pension Investigation Kickstarter Campaign by Forbes’ Siedle Goes Live
- Siedle’s Pension Investigation Crowdfunding Project Breaks 52%
- Chippendale Calls for Halt to $3.6M in Tax Credits Awarded to Robbins from Raimondo, Commerce
- GoLocalTV: Is Raimondo Hiding Donations From CA Developer?
- In Case You Missed It: Siedle Report on RI Pension Investments
- State Pension System to be Investigated by Siedle
- Ted Siedle: Hedge Fund Industry Loves RI Pension—For Good Reason
- MINDSETTER™ Ted Siedle: News from the State Pension is All Good
- RI Pension Investigator Siedle in NYT for $1M Indiana Settlement, Coming to RI in October
- Siedle: FBI & SEC Should Investigate Raimondo & Magaziner’s Billion-Plus Losing Hedge Fund Gamble
- Forbes’ Siedle Blasts Rhode Island for Not Hiring Him in Light of SEC Charges
- Siedle Calls Cianci “Rhode Island’s Least Dangerous Politician”
- Riley: AFSCME, Ted Siedle and Marcia Reback Hurt Rhode Island Retirees
- Forbes Columnist Siedle Responds to MINDSETTER™ Riley’s Charges
- RI Retired Teachers Hire Forbes’ Siedle
- Forbes’ Siedle Eyes New Rhode Island Pension Investigation
- NEW: Siedle Blasts Raimondo for Withholding Hedge Fund Info
- Forbes’ Siedle Hits Goal with KickStarter to Audit RI Pension System
- NEW: Forbes’ Siedle Releases Latest Investigation into RI Pension System
- Magaziner Demanding $10K for Public Records Request from Forbes’ Siedle
- Magaziner Should Return $10K to Retired Teachers for Withholding Key Documents, Says Siedle
- Raimondo Receives up to $500,000 Payment from Pt. Judith Firm
- EXCLUSIVE: RI Pension Investment in Raimondo’s Pt. Judith Had Steep Losses
- Raimondo Failed to Report Campaign Gift from CA Developer Who Received $3.6M
- GoLocalProv Sues Raimondo and State Police for Release of 38 Studios State Police Interviews
- Raimondo Calls for Further Delay of Release of 38 Studios Documents, Blocks GoLocal’s Request
- RI Leaders’ Top Questions for Raimondo Administration on Botched UHIP Launch
- Biggest Questions Facing Raimondo Administration’s Botched $500M UHIP Rollout
- GoLocalTV: Raimondo Says Still Doing “Due Diligence” on CA Developer Getting $3.6M
- GoLocalTV: Raimondo Refuses to Order RI State Police to Release 38 Studios Investigation Docs
- Progressive Dems’ Bell Questions Raimondo’s Failure to Report In-Kind Contribution
- NEW: RI GOP Chair Bell “Seriously Considering” Filing Elections Complaint Against Raimondo
- Forbes Columnist Siedle: “Rhode Islanders Were Lied to by Raimondo”
- Bob Whitcomb’s Digital Diary: Trump and Clinton, Raimondo’s CA Developer, and Warren’s Greatness