Weekend Giant Reading, June 20 — 22, 2014

It's the weekend, which means I've got a Giant news roundup for you:

- Governance Woes I:China’s National Audit Office hasindicated中国投资公司displayed “dereliction of duty by managers;” “inadequate due diligence and post-investment management” and selected of overseas managers based on “not very standard” procedures. Ouch.

- Governance Woes II:After the National Audit Office report, the CIC hasvowedto raise its game.

- Moves:Gordon Fyfe isleavingPSP and taking over at BCIMC. Congrats, G.

- Locals:CalPERS has invested nearly$20 billionin California companies and assets.

- The Fee Machine I:Big props to MassPRIM and State of Wisconsin Investment Board forworking hardto minimize hedge fund fees.

- The Fee Machine II:The IRS is trying to help pension fundsreduce feespaid to hedge funds.

- The Green Machines:Mubadala is looking toexpandits footprint in renewables with new wind projects in North Africa.

- Real Estate I:AP3 has launched JV toinvest in retail propertiesthroughout Germany.

- Real Estate II:Alaska has alsoseeded一个创造性的vehicle "to acquire, renovate, and lease residential properties."

- Record Setting:New Mexico’s State Permanent Funds have just hit all-time highs with nearly$20 billionin AuM.

- Models:BCIMC is changing the way it does business;increasingin-house asset management... which is not surprising given Gordon Fyfe is taking over.

- Russia:The CPPIB’s CEO has said that he willcontinue to avoid Russiaas an investment destination: “We just don’t know what the rules of the game there are [in Russia]. We’ll invest in places as long as we can understand the rules of the game and assess the risk, but we just can’t assess the risk.”

- Harvard:Jane Mendillo isstepping downat Harvard. (Did you know: After the massive losses in 2009, Harvard Management Companypivotedfrom the Endowment Model to the Canadian Model? 42% of assets are now managed in-house. I did not know that.)

- Venture Capital:Institutional investors arerecommittingto venture capital in a big way, which means one of two things: 1) VCs have started to offer something more aligned to their LPs' long-term interests (eye roll); or 2) VCs are doing a good job of selling the recent tech boom as something they are responsible for. The latter most likely ...

- Random Thoughts on VC:Let me offer you an analogy as to what's going on in Silicon Valley and the role that VCs play. Let's say the "river of capitalism" here in SV is flowing at 20 mph. It's doing so because of the legacy of the 1800s gold rush (James Lick, Lester Pelton, etc.); the influence of Stanford and Berkeley, the funding from Nasa and Lockheed, the role of William Shockley and the “Traitorous Eight;” the founding of companies like HP, IBM and Apple; the culture of risk taking; the welcoming immigration policies; and so on and so forth. Venture capitalists, for their part, spotted a fast moving river and, to their credit, jumped in, adding another 2 to 3 mph to the downward path. Relative to the ground, then, the VCs can swim up to 23 mph here in the Valley! That's remarkably fast — faster than anywhere else in the world — which is why we see so many game changing companies coming out of our river. But the problem here is that the VCs want to get paid for swimming 23 mph, when really they are only swimming 3 mph...

Have a nice weekend!