June 27, 2013 - Public Employees Retirement Association of New ...

Manager Update Memorandum
To:
Susan Biernacki, PERA Investment Committee Chair
PERA Board Members
From:
Ben Rotenberg, Cliffwater LLC
Regarding: Manager Update – TimesSquare Capital Management
Mandate/Strategy: U.S. Small/Mid Cap Growth Equity / TimesSquare Capital Management Small/Mid
Cap Growth Strategy
Meeting Date: June 27, 2013
CC:
Joelle Mevi, Chief Investment Officer
Julian Baca, Deputy Chief Investment Officer
LeAnne Larrañaga-Ruffy, Portfolio Manager
Summary
The Public Employees Retirement Association of New Mexico (“PERA”) hired TimesSquare Capital
Management (“TSCM” or “TimesSquare” or “the firm”) to manage a U.S. small/mid cap growth equity
mandate in 2005. TimesSquare is managing the portfolio in the style of the firm’s Small/Mid Cap Growth
Equity strategy. PERA funded a separate account for TSCM in April 2005.
TimesSquare manages $202.2 million for PERA as of April 2013, representing 16.5% of PERA’s
Small/Mid Cap Equity Composite, and 1.5% of PERA’s total plan.
The firm is stable, and grew overall firm assets and strategy assets in the Small/Mid Cap Growth Equity
strategy by 12% in 2012 through strong market performance. The firm has seen some outflows of client
assets, with $100 million of net outflows from one client in the Small/Mid Cap Growth Equity strategy.
Recent performance in the strategy has been strongly positive relative to its benchmark.
Relative performance for PERA has also been very good. According to PERA’s custodian, TSCM has
outperformed its benchmark (Russell 2500 Growth) by 3.92% annualized since inception in April 2005
through April 2013.
Cliffwater believes that the firm is well positioned to continue to manage assets for PERA, and
recommends no changes to the mandate at this time.
Firm / Personnel Update
The firm manages $16.6 billion as of March 31, 2013. The firm employs 49 professionals, including 22
investment professionals. The investment professionals are comprised of four portfolio managers,
fourteen research analysts, and four traders. The firm is stable, and grew assets under management by
12% in 2012 through strong market performance. The firm and strategy experienced slight net outflows
during 2012. The firm now manages $5.0 billion in the strategy, which has been closed to new clients for
several years.
TSCM’s Small/Mid Cap Growth team joined the firm in 2000 from their former firm, Fiduciary Trust
Company International, where they had been managing the predecessor fund since 1985. The team is
comprised of two portfolio managers, twelve research analysts, and three traders. This team has been
fairly stable since Yvette Bockstein, the strategy’s founder, retired in 2007. Over the last three years, the
team has added three research analysts, and has lost two research analysts.
This report reflects information only through the date hereof. Our due diligence and reporting rely upon the accuracy and completeness of financial
information (which may or may not be audited by the fund manager) and other information publicly available or provided to us by the fund manager, its
professional staff, and through other references we have contacted. We have not conducted an independent verification of the information provided
other than as described in this report. Our conclusions do not reflect an audit of the investment nor should they be construed as providing legal
advice. Past performance does not guarantee future performance. The information contained herein is confidential commercial or financial information,
the disclosure of which would cause substantial competitive harm to you, Cliffwater LLC, or the person or entity from whom the information was
obtained, and may not be disclosed except as required by applicable law.
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