Apparently the Buck Stopped Here
Posted on June 19th, 2014 in Uncategorized | 2 Comments »
Bloomberg reports on the exit of Harvard money managers Jane Mendillo, Apoorva K. Koticha and Mark McKenna after poor performance.
“When the team posts mediocre records too many years in a row, the coach goes,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “And, not far behind her, the assistant coaches.”
...Harvard’s endowment posted annual average gains of 1.7 percent in the five years ended June 30, 2013, according to data compiled by Charles Skorina & Co.
Harvard should hire me as its portfolio manager. My portfolio did not decrease as much as Harvard’s did during the crisis, and it has crushed Harvard’s returns over the past five years. (1.7 percent? Seriously?)
Harvard, here is my offer: I will manage the endowment for $100, 000 less than Jane Mendillo did. And, although I have no professional investing experience, I will beat her returns by at least one percent. Guaranteed, or I will quit (as long as there’s a nice golden parachute.
Deal?
2 Responses
6/19/2014 9:52 am
Past performance does not guarantee future results.
6/23/2014 11:31 am
http://online.wsj.com/articles/harvard-weary-of-turnover-at-fund-1403481809?mod=WSJ_hp_EditorsPicks
Over a long period of time, the endowment will continue to have problems in generating excellent performance, unless:
1. the university is willing to look at performance over a ten year plus period.
2. it stops the nonsense of relative performance, whether against what other universities achieve or against internal benchmarks that are meaningless with regard to overall performance.
3. it eliminates the funds that are invested in “trading pieces of paper”, rather than investing on a value basis (whether that value is trees, stocks, vc, private equity etc) for the long term.
4. change the payout ratio so that HMC can budget with certainty what the cash flows are
If these things are not done, it doesn’t matter who is chosen to head HMC. That person will not be able to invest properly because he/she will always be looking at the 90 day, yearly, and five year results relative to something else.
You can’t effectively manage money the way things are set up. Some of my friends on The Corporation know this, but for whatever reason, things have not changed. It appears The University is more interested in having a VP for Sustainable Investing at HMC, than it is in setting a proper course of action to sustain excellent results.