CALPERs, the California retirement fund and 500 pound gorilla of the investing world, is losing money rapidly from their real estate investments. They were the drunk rich uncle in the corner of the room throwing money at every wacky deal that came in the room.

That the chief beneficiaries of these deals were also the advisers to CALPERs was never a concern. Hey, we got tons of money and get more every paycheck. It’s all good.

Until it wasn’t all good. Now these deals that the so called advisers are blowing up. And the retirees are watching their investments disappear and the pensions are sinking further and further under water.

So the hatchet is coming out for the advisers that have led CALPERs off the cliff. It looks like it is going to be ugly out there.

The memo didn’t identify any managers. But in October, MacFarlane Partners of San Francisco resigned as a Cal-PERS manager after working with the pension fund for more than a decade.

MacFarlane steered Cal-PERS into one of its worst decisions ever, a $971 million investment in a real estate firm called LandSource Communities, in early 2007. LandSource filed for bankruptcy protection last year, and CalPERS’ investment was wiped out.

In addition, CalPERS is considering firing investment manager BlackRock Inc. of New York, according to a recent report in the Wall Street Journal that quoted anonymous sources. CalPERS will only say it’s reviewing its relationship with BlackRock. via the Sacramento Bee

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