The Sowood Capital loss was much more serious than the mere $350m. The process that led to it and followed it raised doubts about El Arian's organizational judgment -- procedures, management, personnel and the like. Remember: he was way down the list of candidates, and one reason was lack of experience in this kind of world. This is of course another of Larry's Legacies. And for most of the Corporation, Summers' damage to the Management Corporation was an even more important cause for his firing than the relationships with the faculty.
 

Guess we'll have to wait until Sam Spektor weighs in. He thought El-Arian did a great job.
 

El-Arian was doing a fine job and it is a very serious loss at a bad moment.
 

Let's remember that going to Pimco as a co-CEO and co-CIO is hardly a sideways move. It clearly is a step up for him. This is not a reflection of failure at his tenure at Harvard, but success.

I know it's hard for the folks at this site to accept, but Pimco is a much bigger deal than Harvard in the investing world.

There's lots of talk about firms trying hard to poach investment managers, especially with fixed income, with the recent market volatility. This would seem to prove that.
 

That makes sense, particularly on the heels of the endowment performance news, IN SPITE OF the Sowood loss.
 

But it would say something about El-Erian's lack of institutional loyalty if he left simply to make more money, no? Or perhaps there is another reason.....
 

7:42, meet 5:35. If one of you is right, one of you is wrong.
 

Well, 5:35 is clearly wrong -- not least of which because Jack Meyer, rather than El-Erian, made the investment in Sowood.

Co-CEO of Pimco really means future sole CEO of Pimco, and that is indeed a much bigger deal than CEO of Harvard Management Co. And, yeah, it pays better, too. Isn't that a hazard Harvard is obliged to accept if it wants to compete in the upper echelons of Wall Street?
 

Fair question. Ask Yale.
 

It means more money, but also living in Los Angeles instead of Boston, a definite plus.
 

Am I the only one who recalls that the accepted wisdom about El Arian's taking the Harvard Management job was that he was not all about making money, and that an opportunity to teach at HBS, for example, attracted him to Harvard. So was that baloney?
 

People seem to be assuming that this job is all about making good financial decisions. That is only part of it. A large part of course. But the other part, in some ways the more important part, is managing talent (identifying recruiting, inspiring, retaining the best people who are expert in a wide variety of markets that no one person could possibly have a feel for). That is what Jack Meyer added to his also exceptional financial acumen. El Arian did not have that extra ability--management in the best sense. I have the impression that he chose to leave, but that most of the Corporation was not unhappy (though of course all wished that the original appointment had been stronger and everyone knows that a change now with a new president planning a delayed campaign is unfortunate.
 

8:46PM nailed it.
 

What's there to regret? It's a good thing that President Faust can start with a brand new team.

More of Larry's appointments should follow El-Arian's example.
 

Richard, with the new revelations about the McCann child's disappearance, it would be interesting for you to bring up for review the original comments on this blog--if I remember right, they were exceptionally supportive of the parents, and uncritical of the parents' behavior...but the plot thickens!
 

That one was odd. El-Arian implicated, you think, 10:42? Interesting, maybe, that this non-sequitur follows (sequitur) the previous poster's closing:
"More of Larry's appointments should follow El-Arian's example."

Who said Richard's blog wasn't interesting anymore!
 

10:42, not sure what you're talking about—I"m pretty sure I never wrote about the McCann stuff—but it's a bit of a red herring on this thread anyway.
 

Misinformation more likely.
 

Larry Summers has been working as a managing director at DE Shaw, maybe he will take over at HMC.
 

El-Erian's record speaks for itself. In July, an abysmal month for the market, HMC still managed to post a postive, although modest return.
http://www.thecrimson.com/article.aspx?ref=519438
Not to mention the strong return Harvard enjoyed last year.
 

Yes El Erian's record speaks for itself, all one year of it, but Richard brings up the question of lack of institutional loyalty. A guy takes a job like this, says all the right things about how great it will be to work at Harvard, promises to stay long term and then according to the papers started to talk to his old firm Pacific Investment in May, 15 months after he effectively took over HMC.
Clearly his moral and ethical compass leaves a lot to be desired.
I can only believe that no matter what the Harvard spin is,and the press release has lots of spin, the Corporation and alumni are very ticked off at El Erian.
 

The Times article corroborates 10:34:

"At Pimco, Mr. El-Arian made tens of millions . . . Though he was only at Harvard for half of fiscal 2006 he earned $2.3 million"

I imagine his circumstances will be much improved back at Pimco.
 

If one's "moral and ethical compass" is calibrated towards professional, rather than personal obligations, then you really need to get your priorities straightened out 10:34AM.

While the move no doubt comes as a shock to the Corporation and alumni, the only self-serving interest here is doing what's best for his family, and that's exactly what El-Erian should be and is doing in this instance.
 

For all of you kvetching about loyalty, get real. Would any of you done differently? Whatever your field is, if someone came and offered you your dream job (and running the most important fixed income manager in the world has to be pretty close to the dream job for someone like El Arian), with boatloads of money, in a desirable place to live, and you wouldn't take it?

Richard, I'm sure you're loyal to 02138, but if David Remnick or Graydon Carter called and offered, say, $300k (which I gather would be a very generous salary for a magazine writer) to come to the New Yorker or VF and write about whatever you wanted, you wouldn't take it?
 

There are several choices here and a lot on this ethics issue depends on which is the truth.

(1) El-Erian told Harvard he was reluctant to move and couldn't promise to stay long term. Harvard hired him anyway, hoping for the best. In that case, the judgment of those who hired him can be questioned, and the ethics of El-Erian are spotless.

(2) El-Erian himself had misgivings about moving, either for family reasons or because the job wasn't clearly a professional advancement for him. But he shared none of that with Harvard and came anyway. Harvard had every reason to expect he would stay 5 years. A year later PIMCO threw him some bait and he pounced on it. People may disagree on his responsibilities in that scenario, but it doesn't sound great to me.

(3) El-Erian fully expected to stay for the long run and told Harvard so. But something unexpected happened, either
(a) his family was miserable, or
(b) out of the blue his old buddies came after him with a huge offer, or
(c) both.
Harvard is off the hook in that case, but El-Erian may or may not be. And 3 (a, b, c) may not be ethically identical.

(4) It was all a calculation by El-Erian from the get go. He was not rising at PIMCO, and accepted a lateral move to a place where he really didn't want to go, but where he would attract some attention. Harvard had no idea they were renting him rather than acquiring him.

Maybe the difference between these cases doesn't matter, but they don't all feel the same to me. When Rich started this thread I suspect he wanted to know if anyone actually knew which of these scenarios (or some other) was the truth. I have no idea, but it seems to me to be over-reading the tea leaves to infer too much from the known facts.
 

Well, which is it? 12:47 (family) or 12:52 (dream job + $$)? Maybe a little of both. Certainly family needs (spending more time with, etc.) tend to be used as a pretext more often than not - which may not be the case here. We just don't and won't know the real answer.

12:52, he already had boatloads of money and a desirable place to live (when at Pimco), which he gave up for less money and what is assumed to be a less good place to live (Harvard). In those circumstances we are entitled to wonder whether the 18 months might have been intended as CEO training.
 

WSJ:

"Pimco declined to specify Mr. El-Erian's pay package, though Mr. Gross said it would be on par with the compensation he enjoyed during his initial time there...
Mr. Gross (of Pimco) said that Mr. El-Erian's experience at Harvard, where he was president and CEO of Harvard Management, "filled in his resume" in a way that made the new position at Pimco possible."

One doubts the likelihood of first sentence. The second brings up the issues others have entertained.
 

he is my uncle.
he left for family reasons.

he does not care about money. all he cares about is his family and our happiness.

dont say those kind of things