By Dan McSwain, includes “Is San Diego County’s use of derivatives and leverage comparable to Warren Buffett’s? Not by a long shot. Yet that’s the latest theory from Lee Partridge of Salient Partners, the consultant who engineered the new investment strategy for San Diego County’s $10 billion pension fund. Partridge invoked history’s greatest investor in a Sept. 4 presentation designed to calm down nervous board members. Under a revised investment strategy that took effect July 1, managers can use derivatives to put $20.5 billion or more at risk in financial markets, using the fund’s $10 billion in assets as collateral. … Partridge’s response this month essentially went like this: Buffett uses derivatives and leverage, too, so there’s little need to worry about rising risk to taxpayers and retirees. Indeed, Partridge gave information purporting to show that the county’s fund is less leveraged than Berkshire Hathaway, Buffett’s investment vehicle. This was an inspired idea, but not in the way Partridge intended. Instead, comparing his strategy with Buffett’s has exposed just how rapidly San Diego County is embracing risk. …”
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