CalPERS gadfly Jelincic runs for board amid private equity overhaul

A vocal critic of investment manager fees and transparency wants to step back on the stage at the nation’s largest pension as the system works through a massive overhaul of its private equity program.

J.J. Jelincic, who was a board member of the California Public Employees’ Retirement System from 2009 to 2017, is gathering signatures to put his name on the ballot for an open seat this year. Prior to serving on the board, Jelincic worked as an investment officer at CalPERS for many years.

Jelincic will vie for the only open seat on the 13-member board this year against incumbent Henry Jones. The open seat represents retired members of CalPERS, meaning it is filled solely through votes by those retirees. Candidates need 250 signatures from CalPERS retirees to get on the ballot, and Jelincic said he has about 50 so far.

When he decided to not run for reelection in 2017, Jelincic said the board had become a rubber stamp for staff. But since that time several new board members have joined that may have changed that situation, he said. Last year, Corona Police Sergeant Jason Perez shocked the system by defeating newly minted board President Priya Mathur. Also, Fiona Ma joined the board after being elected California state treasurer last year.

Meanwhile, Margaret Brown, who joined the board last year, took up Jelincic’s mantle as board contrarian on questioning the system’s investment decisions.

“With the changes on the board …, the nearing departure of [incumbent Bill] Slaton, and the more-questioning position taken by [state Controller Betty] Yee, I have some hope that the board will re-establish control,” Jelincic said.

Jelincic has been a vocal critic of private equity investing at CalPERS. If he wins the seat this fall, it could throw a wrench in CalPERS’s plans to overhaul its private equity program. However, Jelincic wouldn’t join the board until January 2020, so it’s possible he would miss vital votes on the plans, depending on when the board makes a final decision.

Board members Brown, Yee and Perez recently voted against moving the plan forward, raising concerns about transparency, the scope of the strategy and a lack of details about the structure of the program.

CalPERS wants to build its PE program to have four “pillars” or overriding strategies: traditional private equity partnerships; emerging managers; a fund to invest directly in later-stage technology companies; and a fund to make longer-term investments in mature companies.

The system is working through details of the plan, including who would manage the two direct-investment funds. That could include hiring private equity expertise to run the funds.

“The current CalPERS ‘model’ is a desperate plan to have a plan,” Jelincic said in a statement to Buyouts. “That is why it changes every time it is discussed. I would have more confidence if staff would say, ‘We have made this change and here is why.’ Instead staff just describes it differently without even acknowledging a change.”

He goes on to say: “I would step up to the plate and … bring PE in-house and accept the heat of paying appropriate salaries. The truth is we are paying them now they are just hidden in fees. It would also give a much better alignment of interest between the managers and the beneficiaries. If the board is not willing to bring it in-house, it should look for the returns by leveraging small cap value public equities.”

A CalPERS spokesperson declined to comment.

Update: This story was updated to include a no comment from CalPERS. 

Action Item: Read about CalPERS’s upcoming election here: https://bit.ly/2UkCin5