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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Heard an interview today with Bill Ackman, hedge fund manager, alum, and donor.

Harvard’s headline endowment is $53 billion, but 75% of that is in private investments, like private equity and venture capital, that aren’t regularly marked to market value and are not liquid. He estimated that market value is 30-40% lower than stated. Further, Harvard has $8 billion of debt. Apparently, the day-to-day operation of the overall enterprise is heavily dependent on government money and annual donations.

This reminds me that UChicago is in even worse shape.

How do these great schools with so many great minds mess this all up?[/quote]
It is ridiculous that an endowment should invest 75% in private equity and VC. You would think that they should be forced to ensure stability with only a small portion with higher risk. Just shows that they don't actually have great minds. The minds there are mainly living off reflected glory.

It also could mean there is a greater rot in there that is being hidden and these private high risk high return investments are a hail mary to recover from deeper losses.[/quote]

It’s not 75% in private equity and VC though. It’s 39% in private equity. There are some other things that are less liquid than pure public equities (hedge funds 32%, real estate 5%, other real assets 3%), but all of these can be exited with a bit of time and they are generally uncorrelated with each other.

Most of the claims on this thread of mismanagement or huge capital commitments are unfounded. They are exiting private equity for the same reason everyone is — the outperformance has shrunk and the war on universities means they may need access to funds sooner than planned. Harvard’s endowment distribution as a share of the university’s operating budget has nearly doubled in the past 20 years to almost 40% of the budget.[/quote]

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