AAPG Investment Committee
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Staff: Rick Fritz, Bryan Haws, David Lange, Larry Nation, Anne Payne
Motion: Clint Moore moved and T. Hollrah seconded to approve the minutes of the meeting of May 16, 2005. The motion passed.
Rick Fritz reported AAPG is the process of hiring a GEO DC Director (Geoscience Energy Office at Washington DC) and should have that position filled by November 1. The GEO DC Director will be in place no later than January 1.
Rick Fritz advised he will be spending more of his time on Fundraising. AAPG Foundation recently created the position of a full time fund raising coordinator, and hired a part-time fundraising consultant, Kent Stroman. Rick reports that through Austin Weeks estate, the family gave $10 million which is unrestricted. The Foundation will treat the funds like an endowment. In 2006, the corporate campaign will begin which is for Association money and will be raised for upgrading AAPG’s systems (distribution data), develop datasets and develop student job training programs for those who are just out of college.
Three new positions will be created at AAPG; Sections and Regions Manager reporting to Fritz, Marketing Manager reporting to Blankenship, and Meetings Manager reporting to Cunningham.
David Lange reported they are still working on the audit for the end of the last fiscal year. Preliminary results suggest there will be a small surplus year for income on operations.
Alan Bergin of Larry Thompson and Associates reported the on the individual asset allocation categories and investments of the association portfolio. The total value of portfolio at the end of September was a little over $14 million.
Overall performance of the Association Investments in the past quarter was up 6.2%. Year to date, the association is up 6.7%, and for the past year it is up 16.3%. The portfolio has grown nicely over the last three years and has averaged 15.42% per year.
A. Bergin advised the Dodge & Cox stock fund is now closed to new investors, and that over the next 6 months that LTA is more optimistic regarding value managers and funds as compared to growth orientated managers.
A. Bergin reviewed the performance of Montag and Caldwell. He advised the market is not rewarding large cap growth managers like them which have 35 stocks in their portfolio of very large companies.
LTA reviewed two other managers as alternatives to Montag which are: Renaissance Investment Management and Gardner-Lewis. Both have had returns better than Montag, however, Renaissance uses a quantative approach to select investments, while Gardner-Lewis uses the more traditional approach of meeting with management.
Motion: John Brock moved, and Terry O’Hare seconded to replace Montag and Caldwell and with Renaissance Investment Management. Motion carried unanimously.
The committee expressed interest in reviewing with LTA the fact that the entire portfolio’s international assets were held in the Julius Baer Fund.
A. Bergin advised the committee that Julius Baer covered all aspects of the international investments including the 5% allocation to Emerging Markets. He also advised that the fund has done very well over the past few years and is a highly regarded fund.
Alan Bergin reviewed the analysis they had completed on the portfolios international investments allocation and strategy.
After much discussion and review related to the portfolios international holdings and the committee’s interest to diversify the international allocation, the committee voted to task one-third of the fund’s Julius Baer fund and move it into the Dodge and Cox International Fund.
Motion: R. Tillman moved and P. Pratt seconded to move one-third of what is currently in Julius Baer International Investment Fund to Dodge & Cox International Value Fund. Motion carried unanimously.
There was significant discussion by the committee regarding the low return of the Private Advisors hedge fund in the portfolio. The committee was somewhat comfortable with the Austin Capital fund at this time, but wanted to review this investment as well.
Motion: J. Brock moved and S. Hollabaugh seconded for Larry Thompson & Associates to bring to the next meeting in April, recommendations for replacing Private Advisors Stable Value Hedge Fund and possibly Austin Capital Hedge Fund with a more diversified fund to fund. Motion carried unanimously.
D. Lange reviewed the issues related to the GeoVe$t program and how it was important to review the fund offerings in the program periodically. A listing of the funds modifications provided by LTA based on their analysis were reviewed and discussed.
Motion: P. Pratt moved and C. Moore seconded to Retain/Add or Delete GeoVe$t Funds with fund recommendations from Option 1 on the handout fund listing. Motion carried unanimously. Exhibit “A”.
D. Lange advised the Executive Committee has approved the repayment of $750,000 for the Pension Plan loan that the Association took out with UMB Bank last year. Within the next couple of weeks, $750,000 will be withdrawn from the portfolio to repay that loan. Pension plan loan was taken out September, 2004 at a fixed rate of 3.87%/3 year fixed rate for two million dollars.
The next AAPG Investment Committee meeting will be April 24, 2006 in Tulsa, OK. The meeting was adjourned.
PIMCO Total Return
Morley Stable Value
Vanguard Index 500
Dryfus Mid Cap Value
Mid Cap Value
Hotchkis & Wiley
Quaker Small Cap
Small Cap Value
Nations Intl Value
Vanguard Lifestyle Income
Vanguard Lifestyle Cons Growth
Vanguard Lifestyle Moderate Gr
Lifestyle Mod Grth
Vanguard Lifestyle Growth
Large Cap Blend
Artisian Mid Cap
Mid Cap Growth
Munder Mid Cap Grw
First Am Funds
RS Diversified Growth
Small Cap Growth
Nicholas Small Cap
Kalmar Small Cap
No offering at this time
Lazard Asset EM
MFS Investment EM
No offering at this time
Real Estate (REIT)
Cohen & Steers