Lincoln Board of Trust Fund Commissioners
Minutes of May 9, 2005 Meeting
Donald Collins, Chairman
Douglas Harding, Commissioner
Gregory DeBaryshe, Commissioner
Mary C. Day, Assistant Town Treasurer
Joshua Paul, Bartholomew & Co.
The meeting was called to order at 5:15pm.
Mr. Paul reviewed the portfolio’s performance for the quarter ended March 31, 2005. Mr. Paul stated that that the allocation of the portfolio as of March 31, 2005 was as follows: 53.1% equities, 38.5% fixed income and 8.4% cash. Our policy states that equity can have a maximum of 60%, fixed income can have a minimum of 30% and cash can have a maximum 10%. We are within the guidelines although occasionally we will exceed these limits when there is a sale at the end of the quarter. Mr. Collins felt that his was a good time to move the Equity section of the portfolio up a bit. Mr. Paul stated that he could look into a small mid cap fund but Bartholomew’s strength is not in small mid cap companies.
Mr. Paul stated that he has been purchasing Verizon stock, based on the merger, and drug companies because they are cheap right now and expected to be around for the long-term. Lear was sold in its entirety. It is now priced at $30 and we sold at $54.05. At this point he is watching Nokia as he is not seeing the strength that he wants. He is also planning to pare back on all pure tech players.
Below is the portfolio comparison to the S & P:
Equity S & P
Div. Yld 2.76 2.04
YTD Rtn -0.23 -2.15
5 Yr Rtn -1.53 -3.16
1 Yr Rtn 7.81 6.69
The category labeled International Equity only has two holdings – Tyco and Nokia – this skews the yield at -21.19. We are looking to pare back on both of these. With the Domestic Bonds we protect the account by keeping the maturities short, which lowers the yield but keeps the portfolio safe. The target duration is 1 ¾ to 2 ½ years. We are buying pure Agencies with quarterly step ups, the risk is that they will get called but we don’t mind the risk.
Mr. Paul stated that the goal is to purchase stocks that are cheap and outperform the S & P. In the market they are trying to purchase computer stocks with quality names (not Google types). The oil market is still high and they are looking for price pressure to diminish and prices to decline. Their strategy is to reduce the sectors that are doing well and use the gain to buy less expensive stocks.
Mr. Paul left the meeting at 5:50pm.
Discussion took place to appoint a new Chair for the Board. Mr. Collins was appointed as the new Chair for the next year.
The need to meet more often in order to put together and send out an RFP for managing the Trust Portfolio was discussed. A meeting was scheduled for Thursday, May 19, 2005 at 5pm to adopt a schedule for the RFP process.
The meeting was adjourned at 6:15pm
Donald Collins, Chair _____________________
Douglas Harding _____________________
Gregory DeBaryshe _____________________
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