Should you buy into Harvard's biggest public investment?
Some people think Harvard is smart. But its endowment has lost at least 30% in the last year, which does not impress me very much. Nevertheless, since Harvard has the biggest endowment of any university, what it does has an impact on how other people behave. In fact, it may be a leader of investing trends. Whether that leadership can make you money is up to you to judge.
Harvard cut its direct holdings of publicly traded stocks and funds by 66% in the fourth quarter of 2008. Specifically, at the end of 2008, Harvard Management Co., which oversees the endowment, held $571 million in 70 stocks and publicly traded funds -- 130 less than the 200 stocks and other vehicles valued at $2.9 billion in the third quarter of 2008.
No word on what Harvard is doing this quarter. It would be interesting to look at the stocks it holds now to see if there are good opportunities. For instance, it is placing its biggest bet -- 39% of the total -- on iShares MSCI Emerging Market.
But Harvard has a big share of its endowment -- which was $36.9 billion in June 2008 -- in illiquid assets like interests in venture capital, private equity, and hedge funds. Harvard has tried to sell some of those interests in "the secondary market" but probably has not had anyone willing to buy them at a price it finds acceptable.
In short, Harvard has suddenly gone from being the smart money to being the locked-in dumb money.
Even so, it might be interesting to look at Harvard's biggest public investment to see whether it could meet your needs.
Peter Cohan is President ofPeter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.