Longtime URS Chief Investment Officer Retires; Replacement Named

Bruce H. Cundick, who led the Utah Retirement System (URS) pension to grow from about $13 billion to about $43 billion (as of June 30), is retiring after more than 20 years. Former Oregon State Treasury CIO John D. Skjervem has been named his successor, effective Nov. 8, according to a URS press release.

During Cundick’s tenure, the fund returned a yearly average of more than 7.8%, outperforming more than 90% of similar-size public pension funds, according to investment consulting firm Callan.

“URS retirees may not know his name, but Bruce Cundick played a vital role in their lives,” said URS Executive Director Daniel D. Andersen in a statement. “We’ve been fortunate to have Bruce, not only for his investing expertise, but also his skill in creating and leading a world-class investment team. He’s truly a giant in his industry, and his contributions and commitment to our mission have been immeasurable.”

Cundick was named to the CIO Power 100 List in 2019 by this magazine, which recognized him for his innovation and influence, collaboration, and talent development. Under his leadership, URS has received frequent investment industry accolades for prudent fund management and innovation. In 2018, the American Investment Council ranked URS third among 163 U.S. public pension plans for 10-year private equity returns.

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“I’m grateful for the wonderful staff that I worked with,” Cundick said. “Our portfolio is a success because of their dedication and expertise. I wish them the best and am excited for them to continue to build on the accomplishments we achieved together.”

After a nationwide search led by Michael Kennedy at the global organizational consulting firm Korn Ferry, Skjervem was selected after several qualified candidates were interviewed. From 2012 through 2020, Skjervem, known for his high returns, led a 60-member team responsible for Oregon’s $111 billion financial and real asset investment program, including the state’s $82 billion public employee retirement fund. More recently, he served as the advisory firm CEO for Alan Biller and Associates Inc., involved in all aspects of the firm’s $131 billion investment consulting practice.

“I’m delighted and honored to join URS in an investment leadership role and look forward to extending the exemplary record Bruce and his staff have compiled during his long and distinguished tenure,” Skjervem said in a statement.

Prior to his tenure in Oregon, Skjervem was an executive vice president at Northern Trust, where he held a variety of portfolio management and leadership positions, including chief investment officer for the firm’s $180 billion wealth management division.

“We feel very fortunate to have John,” Andersen said. “He brings a wealth of experience and expertise from both public pension funds [and] private sector money management. We’re confident he can help us take our investment program to the next level.”

URS serves more than 240,000 current and past Utah public employees by administering their retirement benefits and managing the pension fund that pays them. URS paid more than $1.8 billion in pension payments in 2020, the vast majority of which remained in the Utah economy, according to a press release from URS.

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Tags: Bruce Cundick, John D. Skjervem, Oregon State Treasury, Utah Retirement Systems

Inflation is in the air, and so is talk about which companies have pricing power—giving them the flexibility to hike what they charge without their revenue, earnings, or stocks suffering. And UBS has come out with a list of the top companies with the ability to boost prices and not turn off customers.

On it are a panoply of large businesses that seem impervious to whatever inflation does, according to the firm’s number-crunching exercise. Prominent among them: tech giant Apple, sneaker maker Nike, and energy producer EOG Resources.

Suffering industries such as travel and entertainment obviously lack pricing power. UBS has a list of major companies that are the weakest on this score, including insurer Aflac, American Airlines, satellite TV provider Dish Network, and trucker J.B. Hunt Transport.

Other companies have suffered because of rising costs but are only hiking prices reluctantly. Take FedEx, which last month reported a big earnings miss due to burgeoning labor costs eclipsing solid revenue. Its shares dropped more than 8% the same day. The freight carrier then announced that it was pushing up shipping rates an average of 5.9%. Trouble is, that’s not enough: The company has lowered its earnings outlook for the rest of its fiscal year. Result: The stock has continued its descent.

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The Consumer Price Index (CPI) rose 5.3% in August, from 12 months before, and the September reading is due . Many economists expect that the new inflation number will be lower, but ongoing problems won’t lessen—supply bottlenecks, escalating wages, and the eerie feeling that some of these higher prices aren’t transitory.

That’s why UBS went looking for pricing power potentates. The investment house sees Apple as near-invulnerable, given its iconic, must-have devices. Indeed, the firm’s report notes, “End-market demand has been improving year-over-year leading to elevated ‘wait times,’ despite increased product procurement/production.” Higher prices and longer waits for the new products? Who cares? The average price of the new iPhones introduced last month is $1,106, almost 11% higher than the one for last year’s new models.

The biggest company by stock market value on the UBS list, Apple has a commanding advantage, the report says. As UBS describes the situation, “the stickiness of the iPhone ecosystem and high attachment rates of other Apple products (Mac, iPad, Watch, etc.) should create a stable platform going forward.” UBS sees the stock climbing to $175 over the next 12 months, from the current $142, or 23%.

While athletic footwear is a very competitive sector, UBS sees industry leader Nike possessing the brand cachet, innovative spirit, and supply prowess to maintain momentum. UBS’ $185 price target for the stock means a 24% advance should be coming.

The largest stock surge will belong to EOG, according to UBS. Certainly, prices of oil and gas are escalating, given supply constraints, especially in Europe. As UBS sees things, the company has something special: “EOG is better positioned than most by being proactive with input and service costs, while excelling in operations.” The price target of $119 implies a 37% upside from today.