L.P. CalSTRS CIO Resigns Post –

Patrick Mitchell, chief investment officer at the California State Teachers’ Retirement System (CalSTRS), last month announced that he is resigning his post effective July 15 to seek other opportunities in investing.

“A big imbalance between supply and demand as far as entities like CalSTRS looking for private equity” is one motivation Mitchell found to move on. “That’s what I’m going to be trying to do – go out and work either with an existing partnership or develop a new partnership to either do venture capital or equity expansion type of investing.”

Under Mitchell’s direction CalSTRS’ has seen investments in private equity increase to 6.2%, $6.791 billion, in February from 4.5%, $3.077 billion three years ago.

Mitchell, who has been with CalSTRS for twelve years, leaves the pension fund amicably. “I think all the board members are happy for me . . . It was not an unexpected occurrence for them,” he said. He also leaves CalSTRS in much better form than it was in three years ago when he was appointed as CIO.

At the start of his term, Mitchell outlined several goals to be accomplished under his direction.

First, Mitchell aimed to advance CalSTRS to the top quarter of pension funds in terms of performance. Currently, CalSTRS is outperforming 72% of the other large public pension funds, according to the Trust Universe Comparison Service. “The thing we’re most proud of is that the returns are phenomenal,” said Mitchell. “As of March 31, the twelve month return is more than 60% on our total portfolio.”

Mitchell also sought to add value to CalSTRS’ strategic assets available for allocation. “In March our consultant reported that we, as a staff, have added $4.5 billion to the strategic targets over the last three years,” said Mitchell.

Finally, in an attempt to make CalSTRS more like a private company, Mitchell implemented policies, procedures, zero-based budgeting – where budgets are funded based on merit, not the previous year – and business plans for investments. “The business plans are probably the most unique thing that we do because lots of people do policies and procedure, and some people even do zero-based budget, but I don’t know anybody else that actually completes a business plan for each of their investment activities each year,” he said.

With Mitchell as CIO, CalSTRS’ investment portfolio grew to $113.6 billion in March from $74.8 billion in June 1997, according to a statement.

Mitchell is confident that CalSTRS’ success will continue with help from CalSTRS’ consultant Pathway Capital Management and the leadership of Richard Rose and Real Desrochers. CalSTRS’ board will discuss the recruiting process at its May 3 meeting, according to a statement. Mitchell said, there will be a nationwide search for his replacement.