GOP Candidate Meg Whitman's Major Investments
Meg Whitman, the billionaire GOP California gubernatorial candidate, invested in funds with Goldman Sachs, and Blackstone, according to an economic-interest disclosure report she filed with San Mateo County for March 2009-2010.
Whitman, who served on the Goldman Sachs board between 2001-2002 while CEO of eBay, invested at least $1 million with Goldman Sachs Distressed Opportunities Fund IV, which takes positions in financially-distressed companies.
She also has more than $1 million in each of two funds with Goldman Sachs Mezzanine Partners, which provides capital for leveraged buyouts and financial reorganizations.
Other investments listed on her report include Sankaty Credit Opportunities II, an affiliate fund of Bain Capital, and Perry Partners, a New York hedge fund. She also has investments with various Blackstone Real Estate Partners funds.
Whitman, who has been credited for turning online auction site eBay into a powerhouse, made history recently by becoming the GOP's first female nominee for governor. She will take on Democratic candidate Jerry Brown in the November election. Candidates are required to file statements of economic interests with their counties.
Some observers think Brown may try to attack Whitman over her investments, particularly in Goldman Sachs, which has been vilified publicly after being accused of defrauding investors in the sale of financial instruments related to the subprime mortgage market. Brown, 72, would be the oldest governor in the United States if elected.
"Jerry Brown is going to try to negate his age by running as a squeaky, clean outsider," said Greg Valliere, chief political strategist at Potomac Research Group. "I think he’s going to try to portray her as being tied to a culture that got us into all of these problems in the last few years. That’s the downside of being a CEO and being involved in these types of investments. I think Brown will use it very effectively."
During the California primary, rival Steve Poizner, California's insurance commissioner, ran a television commercial accusing Whitman of "investing heavily in Goldman funds profiting from California foreclosures."
"Voters have already seen Meg's opponents pour millions of dollars into incredibly misleading and inaccurate advertising about her investments; but she still won the primary by 38 points," said Tucker Bounds, spokesman for Meg Whitman 2010. "Frankly, the criticisms aren't believable because they are based on wild assumptions and innuendo. Meg is a Silicon Valley business leader who turned eBay into one of the great California success stories, and our opponents are doing everything they can to try and distort the truth."
Another GOP nominee and former Hewlett Packardchief, Carly Fiorina—who is running for the US Senate from California—also listed several Goldman funds on her financial disclosure report filed in December 2009.
Holdings include Goldman Sachs Mezzanine Partners, Goldman Sachs Distressed Opportunity Fund IV and Goldman Sachs Concentrated Mezzanine Y Distressed.
According to her 2008 tax return, however, she sold numerous Goldman investments valued at $11.6 million with a loss of more than $3.7 million. Her campaign declined to comment on the Fiorinas personal investment strategy.
Meanwhile, a number of state pension funds, including the nation's largest, The California Public Employees' Retirement System [CalPERS], also committed capital to money managers in the distressed space, including MHR, Sacramento Private Equity Partners and WL Ross & Company.
If elected in November, Whitman would bundle her assets into a blind trust, said Bounds, a Whitman spokesman, requiring her to sell her entire portfolio and hand the cash to an advisor to manage independently.
“When you have a person who has been so prominent in business, it's incumbent that the media and voters take a hard look at the full range of their business activities because that tells you about their judgment, their ethics, how they assess risk,” said Bruce Freed, president at the Center for Political Accountability. “Risk was at the heart of the economic crisis. Does the way she conducted her activiities in business square with what she claims she’ll do in public life?”
Whitman owns over $100,000 in Goldman stock options. She also has stock in BNP Paribas, Berkshire Hathaway, Gap, Procter & Gamble, eBay and natural gas.