Byron Wien's Atrocious "Forecasting" May Have Cost Blackstone Hundreds Of Millions
The one man in finance, who after Buffett and Munger is way overdue for retirement, Blackstone's Byron Wien who at 77 is only made relevant once a year with his atrocious following year forecast, which due to its ongoing track record of being right approximately on zero out of ten predictions, provides Wall Street with an annual bout of uncontrollable laughter. So far this has been an innocuous exercise in worthlessness, but not any more. According to Bloomberg, Wien's latest forecast may have so infuriated the New York pension system that they may no longer invest money with Blackstone. "The New York City Comptroller’s office backed out of a scheduled meeting with Blackstone Group LP and trustees for the city pension funds who want the firm to repudiate chief strategist Byron Wien’s statement that public- employee retirement benefits are too high." The reason: "Last January, Wien, 77, said in his annual forecast that taxpayers 'literally can’t afford the benefits we have given our retirees in state and local governments and we have to change that.'" The result: New York State pension administrators are not amused.
Even in today's "Bernanke numbers" times, the amount at stake is certainly not trivial: "The city’s pensions committed $225 million to Blackstone’s
latest private-equity fund last year. Three of the funds -- for
police officers, firefighters and civilian employees -- are in
the process of picking managers to oversee a new hedge-fund
investment program." It is only fitting that the world's worst forecaster may also cost his company hundreds of millions with his ramblings.
Representatives of the funds, which are weighing new investments with the New York-based firm, had planned to sit down with Blackstone President Tony James on Jan. 7, according to two people with the direct knowledge of the matter. They were set to ask Blackstone to support public pension benefits in an advertisement in the Wall Street Journal, said the people, who asked not to be named because the discussions were private.
Lawrence Schloss, the city’s chief investment officer, canceled the meeting after the comptroller’s office was asked for comment today by Bloomberg News, one of the people said. Schloss works for Comptroller John Liu, who oversees the city’s $110 billion in pension assets.
“There is no meeting scheduled,” Michael Loughran, a spokesman for Liu, said in an e-mail. Schloss declined to comment. Peter Rose, a spokesman for Blackstone, said the firm “talks with our limited partners all the time about issues that concern them.”
In June, Joan Solotar, Blackstone’s senior managing director for public markets, wrote a letter saying that state and local pension funds have been the single largest investors with Blackstone since its founding in 1985.
“We are proud of the returns we have been able to achieve and the part those returns have played in helping states and cities keep the promises made to their employees,” Solotar wrote in the letter to Pensions & Investments magazine.
Blackstone’s response didn’t satisfy union representatives who sit on the city’s five pension boards and vote on which managers to hire and fire, the people said.
Of course, Blackstone's loss is someone else's gain. Therefore, people like Bill Miller can only hope that Wien's 2012 forecast expands from 10 to well over 100 predictions. Who knows who else the oracle may insult next:
The city comptroller’s office, which makes recommendations
to the funds’ boards, had already compiled a list of potential
hedge fund-of-funds managers that included Blackstone and
Baltimore-based Legg Mason Inc.’s Permal Group, according to the
people, who also asked not to be identified because the list
hasn’t been made public. More than one manager probably will be
chosen, according to the people.
Yet the supreme irony in all of this, is that Wien is absolutely correct: there is no way that the US pension system is sustainable in its current form, and absent trillions in backstop funding from the US government. But in a country in which only propaganda is endorsed, and the truth is to be only whispered in dark corners, people particularly in positions of power, should know their place, and stick with the program.