Lou Morrell, R.I.P.
I want to say a word about my friend Lou Morrell, who died in North Carolina on April 28.
Lou oversaw the endowment at Wake Forest University for more than a decade. Even after he stepped back from his VP Investments job in 2007, he continued to run a piece of the endowment as an actively-managed tactical fund and helped to push the WFU endowment up over a billion dollars. After his “retirement” in 2009 he was approached by some private individuals who wanted help with their investments, and I’m sure they profited from his advice, as everyone else has done.
Lou was a lively, opinionated gentleman and a shrewd investor. As a sideline observer of that world, I often sought his views. He always had time to explain how something worked from the standpoint of a real professional.
Just recently, I was mulling some half-baked idea and thinking that I should really run this past Lou and get his take. Then I remembered that I couldn’t.
We offer our sincere condolences to Ruth Ann, to his other family members, and to his many friends and colleagues.
Requiescat in pace.
Comings and goings:
Peter H. Ammon: Another Yale vet lands another top job:
The most notable recent chief investment officer turnover is the University of Pennsylvania’s acquisition of Peter H. Ammon, formerly a senior staffer at the Yale investment office.
Mr. Ammon is just the latest of David Swensen’s protégés to be tapped to head up a major nonprofit fund. In fact, Yale-incubated CIOs have become so numerous we had to stop and count them up.
Alphabetically, we now have: Seth Alexander at MIT, Donna Dean at the Rockefeller Foundation, Andrew Golden at Princeton, Randy Kim at the Conrad Hilton Foundation, Anne Martin at Wesleyan University, Mary McLean at the (Ewing Marion) Kauffman Foundation, and Paula Volent at Bowdoin College (about whom there’s more in our report on midsize endowments).
Mr. Ammon is impeccably Ivy, starting with an A.B. in Politics from Princeton, where he also worked in the PRINCO investment office and picked up his CFA charter. Then up to New Haven for two Yale degrees: an MA in International Relations, and an MBA from the school of management. He joined the Yale investment office in 2005 and by 2012 was one of five Director-level staffers under Dr. Swensen and Mr. Takahashi. His brief included all marketable asset classes (domestic equity, foreign equity, and absolute return), as well as timber and asset allocation.
Mr. Ammon succeeds Kristin Gilbertson, who led the Penn endowment for eight years. When Ms. Gilbertson announced her departure back in October she said she had no immediate plans except to do some traveling. She’s far from retirement age but, as yet, hasn’t surfaced anywhere else.
Ms. Gilbertson’s proudest accomplishment was to lose less money than anyone else in the Ivy League in 2008/2009. Penn’s relatively modest losses meant that it was one of the first major endowments to claw its way back to its pre-2009 asset size, something many endowments still haven’t quite managed.
Looking at our celebrated study of Ivy and Alt-Ivy endowments (still available at no charge, here: https://www.charlesskorina.com/775/)
…. we see that, remarkably, Yale and Penn had identical investment returns for the five years 2008-2012, both about 1.8 percent. Their Sharpe ratios were also similar: 0.06 at Penn; 0.05 at Yale, suggesting that their risk budgets were almost identical. Mr. Ammon should feel right at home.
Mr. Ammon’s compensation at Yale is not available, but we’re guessing it was in the high six figures, including bonus. Ms. Gilbertson’s total comp in 2010 was $1,467,000, including $566 thousand base and a $756 thousand bonus. Mr. Ammon has undoubtedly been offered a comparable package. That’s half what they’re paying the CIOs at Yale and Harvard, but still a nice step up for the new guy.
Anders Hall: a DUMAC pro succeeds Matthew Wright at Vanderbilt:
Anders Hall, director of public securities at Duke Management Company in North Carolina, has been tapped to succeed Matthew Wright as chief investment officer for Vanderbilt University in Nashville.
As a member of Neil Triplett’s team at DUMAC since 2002, Mr. Hall ran their public securities portfolio, including equities, hedge funds, commodities, fixed income, and currencies. He has a Duke BA, plus an MBA from New York University and a CFA ticket.
Duke’s $5.6 billion endowment has performed well over the past five years, with an annualized return of 2.7 percent as of FY2012. That’s better than most of the Ivy League, and we ranked them number six on our widely-admired Ivys and Alt-Ivys survey.
Vanderbilt’s $3.4 billion endowment has fared less well, with a 5-year return of about 1.4 percent, trailing the 1.7 percent mean for all large (over $1 billion) endowments.
Mr. Hall’s W2 compensation at Duke in calendar 2010 was $743 thousand, including a performance bonus of $484 thousand. Mr. Wright’s comp was in the same ballpark, but with a larger base and smaller bonus: $752 thousand, including a $114 thousand bonus. We presume that Mr. Hall got at least a modest boost as he signed on with Vanderbilt.
When previous CIO Matthew Wright announced his departure back in January, he said it was to pursue an unspecified business opportunity. Exit statements like that aren’t always strictly accurate, but then Mr. Wright surfaced only a few weeks later as founder of Disciplina Group, a new outsourcing firm right in Nashville.
When Disciplina opened for business in February, it was revealed that Mr. Wright had also spirited away two of his former colleagues from Vanderbilt: Coleigh B. McKay, formerly VU’s managing director of credit strategies, and Brant W. Smith, who had been managing director of research. All three of the Disciplina principals have impressive backgrounds. Mr. McKay and Mr. Smith both have MBAs from Vanderbilt and lots of relevant experience. The former’s resume even includes a hitch as an officer in the Army’s 82nd Airborne Division. Combat experience could be relevant for Disciplina as they push into a crowded niche which already contains lots of talented, hungry ex-CIOs, all hoping to monetize their nonprofit investment management experience.
See https://www.charlesskorina.com/the-skorina-letter-no-41/ for a useful list of outsourcers, with names and contact information. We plan to do an update in the fall.
Jameela Pedicini: Harvard hires a “sustainable” VP:
Over the winter, Harvard University, like many other campuses, was confronted by student groups demanding that the endowment be “divested” of oil, gas, and coal stocks.
Harvard notably didn’t do any actual disinvesting, but, in February they did announce that they would hire a Vice President of Sustainable Investing. This individual, reporting to Harvard Management Company’s chief compliance officer, Kathryn Murtaugh, would not necessarily do any disinvesting, either. But the new VPSI would, at least “research and understand sustainability issues,” and would be HMC’s “primary liaison to other University offices on environmental, social, and governance investment issues.”
At the end of July, HMC announced the hire of Jameela Pedicini to fill the new position. Ms. Pedicini previously had a very similar job at CalPERS, the country’s biggest public pension fund. As an investment officer in their Global Governance Program she “supported the integration of environmental, social, and governance factors in investment decision making” and represented CalPERS at “global sustainability forums.”
Ms. Pedicini comes with an MPhil from Oxford, and an MSc from University of Amsterdam. She was at CalPERS for less than two years, and previously worked for the United Nations, at their “Principles for Responsible Investment.”
Whether her appointment will mollify the protesters remains to be seen; but we’d guess not. A couple of movement leaders told the Crimson that creation of the position does not necessarily mean that Harvard will commit to adjusting its investment strategies. They said, “We’re pushing for action.”
But Ms. Pedicini will at least be on hand, liaising and listening sympathetically.
Surfing the sustainable investing L-curve: A noble way to lose money?
Even if you’re the very model of a modern money manager, kitted out with a Sustainable Investing Officer, and all; what would a bold plunge into a green investing model have done for your returns in recent years?
The divesters aren’t just against fossil-fuels; they also “advocate for”, as they would probably say, investments in alternative/sustainable/green/clean energy. Once they get the kinks out of wind and solar, they maintain that renewables are the wave of the future; where the big money will be made.
Ms. Pedicini’s old boss, CalPERS chief investment officer Joe Dear, came to New York in March for the Wall Street Journal’s big, green ECO:nomics conference, and he wasn’t bringing good news for green investors.
According to the Journal, Mr. Dear told the conferees that a $900 million CalPERS fund devoted to clean energy and technology (which started in 2007 with $460 million) has had an annualized return of minus 9.7 percent to date.
“We’re all familiar with the J-curve in private equity,” he said. “Well, for CalPERS, clean-tech investing has got an L-curve for ‘lose.’ Our experience is that this has been a noble way to lose money. And we’re not here to lose money. We have dialed back.”
Mr. Dear added that CalPERS may look again at clean-tech investing if the profits and returns are there, “but if it takes 12 years to get the money out, the internal rate of return is not going to very good, even if the investment is reasonably successful.”
Big institutional investors like CalPERS and HMC can pursue an idea through channels not available to ordinary retail investors. They can buy into private equity and venture capital partnerships; set up separate accounts with expert, active managers to invest in public markets; and generally get access to the smartest, best-connected people in any niche.
But even If you’re just a civilian without those tools, you can still take a flyer in green investing. The divesters may be suspicious of capitalism, but the capitalists don’t take it personally. They’ll invent and sell a “sustainable” index fund just as readily as they’ll sell you a fossil-fuel ETF (like, say, Market Vector’s poetically-named KOL which is a bet on the coal industry).
We found seven indexed ETFs which claim to track green energy stocks and which started up before 01 July 2007. There are some other, newer ones, but we prefer to look at 5-year returns. We can think of these funds as a proxy for the publicly-investible green assets. With these, we could figure out how pure-hearted green investors would have done in the fiscal five-year period July, 2007 to June, 2012.
And, in case you were wondering Barclay’s iShares unit does have an ETF in this niche, but their iShares S&P Global Clean Energy Index Fund (ICLN) didn’t launch until 2008, so we left it off this list.
We’re not sure this list is exhaustive, but we think we have corralled most of the relevant ETFs. There are others tracking things like nuclear energy and natural gas, which could plausibly be called investments in carbon-reduction, but the divesters would probably object to those, so we left them out, too.
The smart people who compiled those various indices, between them, have been screening the world’s public markets pretty thoroughly for green equities over the past five years, rebalancing every month, in most cases. So, how have they done?
Here are the closing market prices for 01 July 2007, 01 July 2009, and 30 June 2012:
Like Mr. Dear’s clean-tech fund in the same period, every one lost money over five years.
Over the most recent three years, four lost money, two made money, and a third broke even.
We constructed a notional weighted-average super-ETF from these seven using their current market caps. That gets us to a crude guesstimate of how the whole group would have performed if you had spread your money over all of them.
For five years, the annualized change in market value on our super-ETF was about -10.5 percent and over three years 2009-2012, it was about -2.4 percent.
So, it appears that the bets available to a green investor in the public markets would have done even worse than Mr. Dear’s PE investments since 2007, though not by a wide margin.
A million dollars spread proportionately across those seven ETFs in July 2007 would have been reduced to about $575 thousand by June 2012. A million invested over 2009-2012, when returns were better, would still have been reduced to about $929 thousand.
Recall that the S&P 500 over 2008-2012, including its full ration of oil and gas stocks (about 10 percent of the index), returned 0.2 percent; and a 60/40 stock/bond blend got you 2.8 percent.
What are these funds investing in? Well, the current fave is Elon Musk’s Tesla Motors. It’s their largest single holding, with about $15 million held by GEX, PBW, and QCLN. It only debuted in 2010 and the stock hadn’t done much by 2012. But it has quintupled in the last eight months, as they finally introduced their Model S sedan. So, the heavy weighting in some of these ETFs is going to make them shine this year. Tesla makes their sleek electric cars in an old GM plant in Fremont, California; across the bay from my office. It’s right by the abandoned factory of another green startup that foundered. Remember Solyndra?
The green ETFs also hold a big chunk of Solar City, which just went public in December and has quadrupled this year. That’s nice for the ETFs who got in early, although a lot of the big money was made in the IPO by the venture capitalists seeding the company, including such prominent names as Silver Lake Kraftwerk, Valor Equity Partners, and Mayfield Fund.
This was a big deal here in northern California, where green-related startups had been under a curse since Solyndra folded in 2011, taking down not only its private funders, but $500 million in federal loan guarantee, now chargeable to the taxpayers.
It happens that Tesla Motors founder Elon Musk is also a co-founder of Solar City, and first cousin of Solar CEO Lyndon Rive. Mr. Musk personally, had a big payday as the stock boomed. Solar City’s innovations have more to do with novel financing of solar installations than with technology, but the customers and investors both seem happy.
So, maybe the green investors will prosper in the end. But, as Kermit the Frog remarked: it’s hard being green.
One of the biggest holdings in these funds is SunPower, the U.S. solar- panel maker. Even though it’s down about 80 percent since 2008, any divester will still like the sound of it. But they better not look under the hood. Even though it still sits in all the green indexes, it’s now owned mostly by the giant French oil company Total, one of the divesters’ prime targets.
Fees vs. performance: Jeff Hooke tilts at the public pension windmill:
A piece of research from an obscure think tank made a bit of a stir in the pension world in July.
Both The Wall Street Journal and the Financial Times took note of a study by Jeff Hooke and John J. Walters published jointly by the Maryland Public Policy Institute and the Maryland Tax Education Foundation.
You can find it here: http://www.marylandtaxeducation.org…
Mr. Hooke argues that public pensions are paying too much in fees to their external investment managers, and getting too little performance in return. And, he also has a plan to fix it.
Looking at pensions in 46 states for the fiscal year ending in June, 2012, the study found total management fees were $9 billion. The authors suggest that this outlay could be cut by two-thirds, or $6 billion if pensions simply put most of their assets into low-cost index funds. This move would allegedly not only cut expenses, but increase net returns.
They report that the funds paying the highest fees saw a median 5-year net return of 1.34 percent; while the funds paying the lowest fees returned 2.38 percent; which, on its face, doe seem a bit perverse.
Coincidentally, at about the same time, a small public pension in Montgomery County, Pennsylvania (a Philadelphia suburb) chose to do exactly what Mr. Hooke advised. They moved most of their $470 million into index funds under the Vanguard Group.
The chair of the Montgomery County Board of Commissioners told the Wall Street Journal that: “The folks on Wall Street do valuable work. But there is no value for the county and other municipalities to be spending these fees and getting a lower return.”
Vanguard headquarters is in Malvern, PA, just a few miles from Philly, and the County had already been doing some business with them. One day the county’s board chair and CFO dropped into John Bogle’s office on the Vanguard campus and sealed the deal. We admire Mr. Bogle, Vanguard’s semi-retired founder, and we are gratified to see that, at age 84, the man still knows how to close a sale.
Some of our sophisticated readers are rolling their eyes. There is a strong argument, for instance, that a pure index-fund strategy buys too much volatility. Alternatives, when they work, are supposed to non-correlate with the major indexes to help insulate portfolios from the ebbs and surges of public markets. And alternatives are still not readily available in liquid, ETF form. So, asset-owners have to pay up to get active management of alternatives. But, the unsophisticated might still reply: volatility-reduction is good, but only if you can get it at a reasonable cost.
The Hooke study has continued to ricochet around the country, attracting both interest and brickbats. It fingered the South Carolina pension fund as having the highest fee ratio: 1.3 percent on beginning-of-the-year assets in fiscal 2012, versus a median ratio of 0.39 percent. Officials at the South Carolina Retirement System Investment Commission were, predictably, not amused, and responded that their fees are reasonable for their specific (alternatives-heavy) portfolio.
We’ve grappled with the fees in South Carolina previously. Readers may recall that we interviewed state treasurer Curtis Loftis, back in May, 2012, https://www.charlesskorina.com/730/, on the same topic. Mr. Loftis has long inveighed against those fees and says that they are not justified by the fund’s modest returns.
We don’t want to delve too deeply into this murky subject, but we think there are two points worth mentioning:
First, the South Carolina people make a reasonable point: if investment managers, in their wisdom, choose an unusually high allocation to actively-managed alternatives, they are going to pay higher fees relative to their total assets. There’s nothing necessarily improper or scandalous about that. The SC pension allocates about twice as much to alternatives as the typical state pension and, over time, that allocation will either justify itself, or not.
Second, the SC people, and others, have complained that the study is flawed because public pensions around the country don’t report their expenses in a uniform way, which unfairly disadvantages some when those ratios are calculated. Here, we’re inclined to defend Mr. Hooke and his co-author John J. Walters. We’ve read the paper and talked to Mr. Hooke. We’ve also spent some time ourselves trying to wring information out of the public reports of various pensions, a task we wish on no one. We think they did a conscientious job in extracting data from public reports, which is harder than it looks.
Every state pension publishes a CAFR – comprehensive annual financial report – which is supposed to follow rules of the Government Accounting Standards Board. But there is a certain amount of wiggle room regarding reporting investment expenses. Sarah Niegsch Corbett, director of the SC pension’s operational due diligence, told The State newspaper that accounting rules for reporting investment fees are not very specific and that “a lot is left to interpretation.” She says that they disclose more than they are strictly required to. The South Carolinians point to Florida, which says in its own reporting that carry and performance fees for real estate, infrastructure, hedge funds, private equity and overlays are not included in their dollar amount for “fees.”
Pensions use consultants who figure out what expenses they’re really paying and how they compare with their peers. CEM Benchmarking up in Canada, for instance, is a specialist in this area. But, of course, this information is confidential. They may allude to the existence of such studies to suggest that they are, in fact, really cost efficient. But the public has to rely on the numbers actually presented by the accountants, which vary from state to state. So we sympathize with Mr. Hooke when he tries to interpret public documents and is told that the data in those documents are flawed and inconsistent, by the same people who publish the documents.
When I called up Mr. Hooke he was happy to talk to me about his study. Well, maybe “happy” isn’t quite the mot juste.
Jeff Hooke, incidentally, has a solid bio: BS from Penn, MBA from Wharton, and work at places like Lehman Brothers and International Finance Corp (a World Bank affiliate). And, as an investment banker, he understands the fee-earning side of the business.
His research into public pension fees has been done completely gratis, on his own time and his own dime (the Maryland Tax Education Foundation is mostly just him) and he told me that that he’s through tilting at this particular windmill for now. He made himself available to various legislative committees, but he got the impression that sharply reducing pension costs was not high on any political wish-lists. One brave solon took him aside and told him that they might think about moving some assets into index funds, as long as CalPERS does it first.
And, some of the people he does business with in his investment-banking capacity weren’t necessarily slapping him on the back for his public-spiritedness, either.
But we congratulate him for his honorable effort.
Disinvesting in logic:
The titanic war over anthropogenic global warming seems to have spilled over into our own peaceful little shire.
Certain anti-AGW campaigners have noticed that a diversified stock portfolio allocates 10 percent or more to the energy sector, and they are shocked. This spring they showed up on campuses demanding that endowments dump their fossil-fuel-tainted assets forthwith.
Bill McKibben, who majored in journalism at Harvard University and once wrote the “talk of the town” pieces in the New Yorker, is the most visible leader of this disinvestment effort. Over the winter he roamed the country and fired up the campuses in a (“sustainable”) bus, with a rotating cast of activist artists, actors, and musicians.
Mr. McKibben has come up with a surprising offer for endowment investors. He claims that we can have our environmentalist cake and eat it, too. A de-carbonized portfolio, he asserts will do just fine. We can save the planet, and may end up making more money than ever!
This is zealotry with a smiling face and it makes us just a little suspicious. We may not be up to speed on environmental science, but we dimly recall that drastically un-diversifying one’s portfolio isn’t a promising path to better returns.
But Mr. McKibben has it covered.
His 350.org group and some kindred spirits sponsored a paper called Institutional Pathways to Fossil-Free Investing: Endowment Management in a Warming World. It was published by the Tellus Institute in May, and its principal author is one Joshua Humphreys, Ph.D. Dr. Humphreys isn’t a finance guy, either, but he is “an historian of the social problems of capitalism,” and he sometimes lectures at Harvard.
You can inspect it here: http://gofossilfree.org…
There are only two real arguments adduced in the paper
First, there is a de minimus argument: Stripping the 200 or so targeted stocks will hurt your returns, but only by a tiny, teensy, little bit, and you won’t even notice. Dr. Humphreys cites a study by the Aperio Group which claims that excluding the whole fossil-fuel industry from a passively-managed equity strategy would cause no serious tracking error, and would create a theoretical return penalty of less than half a basis point (0.0034 percent). See: http://www.aperiogroup.com/system…
This amounts to saying that disinvestment has no effect on performance. But that has no force at all unless you already favor disinvestment for non-financial reasons. This is not the kind of knock-down, cold-hearted, financially-rational argument the author promised at the outset. We are officially disappointed.
The second argument looks more formidable. You shouldn’t invest in the oil/gas/coal sector because all those stocks are going to crash in the near future and your investment will be wiped out! Now we’re getting somewhere. But why is a crash inevitable (in addition, of course, to being highly desirable!)? Because of stranded assets. This is also known as the “unburnable carbon” scenario.
It’s well-known and apodictically true (argues Dr. Humphreys) that the average temperature of the earth will soon rise by two degrees Celsius. When that happens, the oil/gas/coal extractors will be compelled to stop extracting. But that means all that oil/gas/coal left in the earth will be economically worthless. Since those assets are the same “reserves” valued at billions of dollars on capitalist balance sheets, the markets will drive their stock prices down and you’ll be really, really glad you sold all them when Dr. Humphreys advised you to.
Students of classical rhetoric will recall the petitio principii, the fallacy in which the premise presupposes the truth of its conclusion. In this case: if history unfolds exactly as foreseen by AGW theorists…, then it will unfold exactly as foreseen by AGW theorists!
But the “stranded assets” argument depends as much on geopolitics – the observed behavior of nations – as on environmental science. It predicts (actually, it just assumes), that the nations of the earth will indeed rise up and shut down fossil-fuel extraction. But, even assuming that temperatures rise on schedule, will politicians follow the script, and thereby ensure that those assets really do get stranded?
What does recent history, as opposed to Mr. McKibbens’ fond hopes, tell us about the behavior of these states?
For boards and CIOs who have to actually grapple with this question (and respond to the McKibbens campaigners) we suggest a look at this study by Advisor Partners:
Daniel Kern considers three possible scenarios with respect to the S&P 500: no divestment (business as usual); partial divestment (sell the “worst” energy companies, buy the “best” ones); and total divestment (unload the whole energy sector – 11 percent of the S&P).
He uses standard statistical tools to figure out how much tracking error (relative to the index) is introduced by partial or total divestment (including back-testing of a hypothetical portfolio back to 1989).
The “partial” portfolio adds 1.06 percent of tracking error; the “full divestment” portfolio buys you 1.57 percent.
Mr. Kern (a Berkeley MBA, past president of the San Francisco CFA society, and a veteran portfolio manager) is agnostic on the politics. In fact, his firm will be happy to build a portfolio accommodating investors of any political tendency, or none. He just crunches the numbers and reports.
The back-testing reveals (unsurprisingly) that the fossil-free portfolio is higher-risk, with long stretches of both over- and under-performance with respect to the S&P. And, of course, the fossil-free portfolio underperforms when fuel prices rise.
He also points out that both divestment scenarios substantially increase risk in a high-inflation environment. You may or may not expect higher inflation in the near future. But, as scenarios go, we think that higher inflation in the near future is far more likely than that China or India will stop burning coal and leave their modernizing masses in the dark.
In our report on midsize endowments, https://www.charlesskorina.com/nl49-special-report-on-midsize-endowments/, we noted the performance of Paula Volent at the Bowdoin college endowment.
Bowdoin got the McKibben treatment earlier this year, but Ms. Volent (who, for all we know, may like the Earth very much) shrugged off Mr. McKibben’s offer to help improve her endowment. She estimated that the portfolio turnover required to excise the targeted 200 firms and to replace their carbon-exposed commingled funds with carbon-free index funds would have generated total returns 5 percent lower over the next decade versus the most recent one.
“Over a ten-year period,” she said, “we would lose over $100 million.”
Dr. Humphreys characterizes her statement as a “non sequitur,” which leads me to suspect that he’s shaky on the meaning of non sequitur.
And up at Cornell University, their new CIO, A.J. Edwards also did not seem convinced by Dr. Humphreys’ opus.
In March, Mr. Edwards said:
“If the University decided to exclude [energy sector] investments from its endowment, this decision would have a material impact on the return of the endowment and its contribution to the operating budget of the University.”
He pointed out that the expected rate of return from the energy sector was one of the highest of all asset classes. And, he said, alternative energy strategies so far have rarely produced returns that met the school’s risk and return needs.
Mr. Edwards’ and Ms. Volent’s response to the McKibben/Humphreys thesis (and, come to think of it; ours, too) may seem cogent. But the struggle is not over.
Only weeks after Cornell declined to board Mr. McKibbin’s bus, a Cornell group which, according to the Cornell Sun “advocates for” [sic] action on climate change, organized a “die-in.”
A disinvestment “die-in,” if you’ve never been invited to one, features students pretending to be dead, holding up posters with quotes that support their cause.
A leader of the group said she hopes the demonstration will show Cornell that students are “both serious and sincere about divestment.”
We can’t think of anything more serious, or sincere – or unlikely – than a dead person waving a political poster. But it’s an irrefutable argument (or possibly the beginning of the zombie apocalypse) and we can think of no possible rejoinder.