http://www.post-gazette.com/pg/11163/1152922-435-0.stm
U.S. Steel's $20 billion pension honcho riding into sunset
Gary Glynn ran fund for 26 years
Sunday, June 12, 2011
By Len Boselovic, Pittsburgh Post-Gazette
The comings and goings of corporate pension fund managers typically do not qualify as headline news, but the departure of U.S. Steel's Gary A. Glynn is worth noting
Mr. Glynn, 64, has managed the United States Steel and Carnegie Pension Fund since 1985. U.S. Steel said last week that the Springfield, Vt., native would retire at the end of next month.
The tumult, disorder and irrational exuberance Mr. Glynn has seen over those 26 years includes: the 1987 stock market crash, the Asian contagion of 1998, the tech bubble, 9/11, the housing/credit bubble and the Great Recession.
U.S. Steel -- or USX as it was called for much of Mr. Glynn's career -- also changed dramatically. The $3.5 billion acquisition of Texas Oil & Gas in 1986 completed a diversification into energy that began with the 1982 purchase of Marathon Oil. A proxy battle with activist investor Carl Icahn ensued over how to energize USX shares, which Mr. Icahn believed were depressed by the steel unit. That led to the creation of separate stocks for the steel and energy businesses. Ties between the two stocks were severed for good in 2001.
After that, U.S. Steel defied a wave of bankruptcies that overwhelmed the industry and was a major player in the consolidation that ensued. Its investments included purchasing moribund government-owned steel producers in the Slovak Republic and Serbia.
Through the turmoil and change, Mr. Glynn's pension funds generated returns of nearly $20 billion based on a review of U.S. Steel and USX annual reports from 1986 through 2010. By comparison, the company's steel business -- and its energy businesses until they were spun off -- accumulated profits of nearly $7 billion over the same period.
• • •
Speaking of savvy investors, the tool belts of some members of Congress apparently enable them to do more than partake in perpetual partisan bickering and inappropriate tweeting.
A study by college professors indicates that a portfolio mimicking the stock purchases reported by members of the U.S. House of Representatives outperformed the stock market by about 6 percent annually.
So what makes members of Congress -- nearly half of whom are millionaires according to the most recent analysis by the Center for Responsive Politics -- such brilliant investors?
Stop and think about what they do for a living: use nonpublic information to legislate the fates of business and the economy. The authors wanted to test the theory that having such information "could yield significant personal trading profits." After examining more than 16,000 stock trades by about 300 House members from 1985 to 2001, they concluded that it did.
"We find strong evidence that members of the House have some type of nonpublic information which they use for their personal gain," the authors concluded in a study published in the journal Business and Politics.
The researchers are Georgia State University's Alan J. Ziobrowski, James W. Boyd of Lindenwood University, Ping Cheng of Florida Atlantic University and Augusta State University's Brigitte J. Ziobrowski.
Their work was inspired by a previous study that found that U.S. senators were better investors than hedge fund managers. That study of senatorial stock trading between 1993 and 1998 found that senators outperformed the market by about 10 percent a year.
The findings of the House study mirror what the Senate researchers found in two ways. In both chambers, the investing abilities of members deteriorated the longer they stayed in Congress. And in both chambers, Democrats were better investors than Republicans.
The researchers said House members do not have to sell their stocks when they take office, can trade stocks while they are in office and do not have to recuse themselves from voting on legislation that affects companies in their portfolios.
They do have to report securities transactions they made the previous year, as well as those made by their spouses and children. While those disclosures are public, they can be complicated, the researchers stated. Moreover, they believe it would be difficult for most voters to compare those securities trades with the content of legislation and how their congressman voted on that legislation.
Two House members want to make Congress abide by the same insider trading rules that apply to other investors. Legislation reintroduced this year by Rep. Louise Slaughter, D-New York, and Rep. Tim Walz, D-Minnesota, would prohibit members of Congress as well as the executive branch from trading securities based on nonpublic information. It would also prohibit them from disclosing such information to other investors.
"The potential for abuse is obvious and troubling, and there is simply no good reason Congress should get to play by a separate set of rules in the stock market," Mr. Walz stated.
The researchers who studied House members are also concerned. Based on the number of questions their work raises, "clearly further research is warranted," they wrote.
Amen to that, brother. But do you really think Congress will be inclined to do something about these or any other research findings on this issue?
No comments :
Post a Comment
Please keep your comments polite and on-topic. No profanity