Amazon (AMZN) founder Jeff Bezos’ ongoing feud with The National Enquirer, which exposed his intimate text messages with mistress Lauren Sanchez last month and allegedly blackmailed him with even more embarrassing proof of his affair, may look like mere Page Six drama on the surface. But apparently, the amount of media attention the scandal has drawn so far has upset many seemingly unrelated parties.
The latest to express anger over the whole Bezos-National Enquirer face-off is the New Jersey State Investment Council, which manages $76 billion in pension funds on behalf of the state’s public employees.
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Turns out, the state pension fund is a shareholder in hedge fund Chatham Asset Management, which owns the majority of The National Enquirer‘s publisher, American Media Inc. (AMI).
“The allegations of AMI’s conduct, if true, are completely unacceptable and violate our expectations for investment partners,” Adam Liebtag, chairman of the investment council, said in a statement to Bloomberg on Wednesday. “It is extremely disappointing that the pension fund, as an investor, and our beneficiaries, have to be linked to such a distasteful story.”
As Observer has learned, the New Jersey pension fund has invested a total of $570 million in two Chatham funds (one in 2014 and the other in 2017). The indirect holdings in AMI have delivered “favorable returns,” a spokesperson for the New Jersey State Investment Council said.
Liebtag said the investment council had communicated its concerns to Chatham and suggested that the state pension could withdraw from the hedge fund if AMI’s public spat with Bezos continued.
“While the investment has performed well to date, that is no excuse for this type of behavior. We continue to explore all available options,” he said.
Public pension funds like New Jersey’s have long faced criticism for putting public employees’ pension money into hedge funds, which typically charge much higher management fees and commissions than more conservative investment products like index funds or bonds. During hedge funds’ heyday, pension investors often justified these fees with the market-beating returns that hedge funds achieved.
But as hedge funds’ overall performance has declined in recent years, most pension funds allocate only a small percentage of their total assets to them. The New Jersey fund, for example, had about 3.8 percent allocated in hedge funds as of the end of 2017, according to its latest annual report.
“While the Department of Investment (a unit within the New Jersey State Treasury) plays no role in the management of a hedge fund’s portfolio companies, it expects the funds to invest in good businesses with strong management teams that follow all applicable laws,” the New Jersey fund spokesperson said. “DOI expects that Chatham will take whatever steps are necessary to protect its investors from undue risks.”