Rhode Island Treasurer Gina Raimondo loaded up the state pension portfolio with hedge funds. Now that she’s running for Governor she sold the position in Daniel Loab’s Third Point LLC hedge fund. The WSJ explains here:
So why the Raimondo heave-ho? The answer is union politics, specifically opposition by the American Federation of Teachers to education reform, especially school choice. Mr. Loeb and his wife are big donors to charter schools, which is enough by itself to earn the wrath of AFT President Randi Weingarten.
But the AFT put Mr. Loeb high atop the union’s hedge-fund black list last year because he also sits on the board of the New York chapter of StudentsFirst, Michelle Rhee’s education reform outfit that advocates teacher accountability in part based on student achievement. He is also a trustee of the Manhattan Institute, which favors school reform and in 2011 honored . . . Ms. Raimondo.
Mr. Loeb responded to the public union pressure last year by pledging an additional $1 million in Ms. Weingarten’s honor (on top of an original $2 million) to the Success Academy Charter Schools in New York City and encouraging others to do likewise.
Ms. Weingarten hasn’t forgotten, and she and her national enforcer Dan Pedrotty have been leaning on Ms. Raimondo to pull the state’s pension-fund cash from Third Point. Last week she obliged. A spokeswoman for the Treasurer says politics had nothing to do with the decision, which she says was motivated by the commission’s decision to reduce its “beta risk” (i.e., sensitivity to equity market moves). According to the Treasurer’s office, Third Point has the “highest equity market sensitivity” among the state’s hedge-fund investments.