The End of the Yale Model?
Posted on June 30th, 2009 in Uncategorized | 10 Comments »
In the Journal, Craig Karmin writes that “the markets finally found a way to stump the Ivy League.”
The fiscal year for most endowments ends Tuesday and nearly every one has had big declines, but smaller endowments are poised to outperform heavyweights like Harvard University and Yale University by significant margins. Endowments with less than $1 billion generally held up better by putting more money in fixed income and less in alternative investments like hedge funds.
Any predictions on Harvard’s number?
I’m going to say down 27-28%. Here’s why: The number has to be close enough to 30% to be credible—i.e., to avoid making Drew Faust look stupid for saying 30% all year long–but in order to put a positive spin on things, the value of the illiquid investments will have been sufficiently massaged so that Harvard does a little better than predicted.
10 Responses
6/30/2009 10:20 am
With good first two 09 quarters I say down 25.8% to $27.5B. Call me Pollyanna.
6/30/2009 2:18 pm
Harvard Magazine has an update on the reshaping. The most interesting part is at the end, quoting yesterday’s Barron’s: “By [Barron’s reporter] Bary’s calculation, Harvard has $11 billion of future commitments to such investment partnerships [in private equity, real estate, etc.] (as disclosed in its annual financial statements as reported in Harvard Magazine; these commitments extend over the next decade), and an endowment now valued at $25 billion.”
6/30/2009 2:37 pm
Hmm. That would be bad, over 32%. I’m still holding out for reasonable amount under 30%. When do we actually find out?
6/30/2009 3:07 pm
RT,
You’ll probably find out in early September when “The John Harvard” letter is written.
You said: “With good first two 09 quarters” I hope that is the case for the endowment, but “the market” was only up slightly, less than 2% for the first six months.
Where is Edward Epstein who wrote both in November 08 and January 09 that according to sources close to The Corporation, Harvard was down perhaps by 50%. Pure BS as I said both times, but so many people really think they have “sources close to The Corporation.” Total delusion.
6/30/2009 3:29 pm
Harry-Not to get possessive or anything, but I did raise the $11 billion in commitments in my Boston magazine article about a month or so ago…they’re there in the annual report, though not easily found.
I also think that we need to look at any number with skepticism, because the value of the illiquid investments is decided by outside parties (hedge funds, private equity firms) who then report back to HMC….
6/30/2009 4:41 pm
Ah yes. But of course I didn’t give it any credibility when you said it! 😉
6/30/2009 4:53 pm
Next up: David Ortiz confesses…..
6/30/2009 9:07 pm
http://www.vanityfair.com/online/daily/2009/06/harvard.html
6/30/2009 9:36 pm
Second quarter, I should have said, Sam. The Vanity Fair article looks interesting. I’m curious to see further details on the interest-swap issue:
“The swaps were put in place under former Harvard president Larry Summers in the early 2000s to protect the university against rising interest rates on all the money it had borrowed. Instead, interest rates plunged. Yet for reasons no one can seem to explain, the university simply forgot to (or chose not to) cancel its swaps. The result was a $1 billion loss.”
7/1/2024 10:47 am
I’m going with down 22-23%.