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RI’s Investment Losses in Raimondo’s Pt. Judith Have Grown 127%

Sunday, October 23, 2016

 

Rhode Island’s investment losses in venture capitalist Gina Raimondo’s Point Judith Capital are piling up for the Rhode Island State Retirement Fund. At the end of 2015 it was bad, and at the mid-point of 2016 it is now far worse.

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.

State Treasurer Magaziner moving away from Raimondo's investment strategy

How Long is Rhode Island Locked in?

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

Prev Next

Curren, Meredith

Director of Appointments

$5,000

Prev Next

Rolfe, Catherine

Communications Associate

$36,471

Prev Next

Pellegrino, Angelika

Communications Associate

$36,471

Prev Next

Hytinen, Neil

Legislative Aide

$40,895

Prev Next

Abell, Octavia

Special Assistant to Deputy Chief of Staff

$44,271

Prev Next

Gutierrez, Julia

Protocol Manager

$44,271

Prev Next

Casttriotta, Rebecca

Executive Administrative Asssitant

$47,228

Prev Next

Gering, Catherine

Appointment Special Assitant

$48,715

Prev Next

Natareno, Jason

Special Assistant to the Governor

$48,973

Prev Next

Allard, David

Outreach Manager

$52,272

Prev Next

Manning, Helen

Special Assistant to the Governor

$53,003

Prev Next

Harris, Kelly

Director of Scheduling

$56,694

Prev Next

Inman, Bradford

Director of Constituent Services

$56,694

Prev Next

Poddar, Keshav

Policy Analyst

$56,982

Prev Next

Abelow, Hannah

Policy Analyst

$56,982

Prev Next

Greene, Judith

Legal Administrative Assistant

$59,036

Prev Next

Fondreur, Jennifer

Office Manager

$63,793

Prev Next

Vota, Americo

Community Affairs & Outreach Advisor

$61,751

Prev Next

Desiderato, Ronald

Special Assistant to the Governor

$64,940

Prev Next

Wison, Dana

Executive Assistant to the Governor

$67,508

Prev Next

Nevins, Arthur

Education Policy Advisor

$69,144

Prev Next

Amol Gabriel

Director of Public Engagement

$82,572

Prev Next

Aberger, Marie

Press Secretary

$88,798

Prev Next

Hudson, Heather

Policy Advisor

$93,575

Prev Next

Iannazzi, Andrea

Special Counsel

$98,340

Prev Next

Raia, Mchael

Director of Communications

$122,186

Prev Next

Cheng, Eileen

Deputy Counsel

$122,186

Prev Next

Moses, Amy

Deputy Counsel

$126,951

Prev Next

Bucci, Matthew

Director of Governor's Office

$146,026

Prev Next

Vura-Weis, Lisa

Deputy Chief of Staff

$146,026

Prev Next

Gallagher, Kevin

Deputy Chief of Staff

$146,026

Prev Next

Richards, Claire

Executive Counsel

$155,385

Prev Next

Beane, Eric

Deputy Chief of Staff

$155,564

Prev Next

Smiley, Brett

Chief of Staff

$170,460

Prev Next

Cruise, R.David

Legislative Director

$178,899

 
 

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