Dec

7

Bollinger Says Endowment Loss Similar to Harvard’s

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PrezBo had already “conceded that the endowment was down” at his last fireside chat, but now Bwog has some information on the scale of the damage:

At the University Senate’s monthly plenary on Friday, PrezBo told the Senate that, over the fiscal year, Columbia’s endowment has lost “about the same” percentage as Harvard’s, which lost 22% of its value in the first four months of the new fiscal year

He declined to give more specific figures at the public plenary, but Bwog has been told that the number may be a little less than Harvard’s — somewhere around 20%. More specific figures should be coming in the near future. Regardless, the loss marks a steep fall from last fiscal year’s 2% rise

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19 Comments

  1. Sounds like  

    an en-down-ment to me!

  2. nice  

    graphic, blog. Also, suck it punster.

  3. damn

    Harvard lost more money than Columbia even has altogether...

  4. shit  

    bwog....funny speech impediment, that, clearing up just long enough to acclaim bwog's image-selection

  5. OK so...

    can we get some clarification on this stuff? The WSJ blurb that's the source for a lot of this said that "investment losses" at Harvard came to 22%. While the writers of the article decided that meant the whole endowment, the article itself noted that the number was approximate since other assets hadn't been factored in, and the total loss on the endowment could be worse than the 22% cited (or it might not be that bad).

    Also, if I'm not mistaken, Columbia doles out its endowment to various outside funds for management, while Harvard has its own investment corporation. The effect is that Columbia has to pay out a boatload in management fees regardless of performance, while Harvard doesn't have the added cost.

    consider: http://www.wikicu.com/Endowment#Hedge_fund.3F

    • No fees  

      Columbia's endowment is managed by the Columbia Investment Management Company. See http://www.wikicu.com/Columbia_Investment_Management_Company

      To the extent that they invest in hedge funds and pay fees like a fund of funds does, I guess it's possible there's a boatload of management fees to pay, though they are often discounted for non-profits. And while I'm not sure what the allocation to outside managers is, I doubt it's substantially different from Harvard's.

      I've been hoping that the lower returns relative to Harvard over the past few years indicated a much lower risk profile, but maybe it just meant not-so-great management :(

      • HVD  

        Harvard is well known for having significantly more portfolio managers on its payroll than other institutions (ie. this was one of the reasons Jack Meyer left. His internal PMs weren't being compensated well enough.

        Moreover, it's somewhat unlikely that Harvard or Columbia or anybody else has high exposure to CDO type products. The problem is that the equity markets are down 40% and most hedge funds are down significantly too (unlike 2001).

    • Alum

      Harvard uses both its own investment company and outside managers, to get the benefit of different strategies. Columbia probably does the same thing.

      Keep in mind that Columbia relies less heavily on its endowment than do most peer schools, including Harvard. Some of them get over 30% of their budgets from endowment income, but Columbia gets less than 10% that way. A 22% hit here is 2% of the overall budget, but a 22% hit at Harvard is more like 7%. Harvard can't possibly cut its spending by 7% in the near term, so it will have to dig into principle. Cutting 2% here will be painful, but not nearly as much as 7% would be.

  6. LEX  

    I think Columbia, like Harvard has its own investment corporation. It would make more sense for Columbia to do that. Being an institutional investor of such a scale, Columbia, like Harvard invested in some of the high risk CDOs, derivatives, sub prime mortgages and other securities that tanked during this crisis. It would have been extremely hard for these institutional investors to unwind all of these trades I imagine and that explains their losses.

    Columbia does invest in various companies - some of questionable interest. For example, I was reading an article in Bloomberg Markets magazine that the school lost $100MM investing in a company run by a notorious Czech criminal (who now lives in the Bahamas or some other Caribbean island where he can't be extradited).

    I feel as students we should know more about where the university sticks its money. But I can tell you one thing, it's in very, very risky stuff. The more risk, the more reward, and those numbers that the Ivy Endowments were pulling a few years ago (12-19% return yearly) were something!

    The World Wide Credit Crunch is hitting everyone and everything. I just hope Columbia is reversing their positions and thinking how to deal with this crisis appropriately.

    • realistic alumnus

      students DO NOT have the right to know all things financial about the university. Neither do faculty.

      Students = Customers
      Faculty = Employees
      Trustees/Administrators = Gatekeepers

      Just because you buy a frappucino or work as a barista, doesn't mean you get to examine Starbucks' confidential investment portfolio.

  7. bwog  

    20% of the endowment lost, or 20% on the investments?

  8. checkit  

    HARVARD SUCKS!!!!! FRESHMEN SUCK!!!!!! USA USA USA USA USA!!!!

  9. I still say  

    prezbo should cash out the endowment and take it to his summer home and just chill with it for a few years. just to keep it safe.

  10. misguided thinking  

    I don't think that is a very accurate description of the hierarchy within a university. Students, while receiving an education, are really buying an equity stake in Columbia, realized as a Columbia degree. They have an interest in seeing their alma mater succeed, thereby increasing the value of a Columbia degree.

    By that logic, students should have access to the investment portfolio to make sure possibly uninterested parties (ei. administrators) are using funds and investing well. Trustees can merely be seen as the majority shareholders, since they tend to be the ones who've donated the most.

  11. ...  

    bollinger may claim that columbia's endowment is 20% smaller, but the pain in my arse tells me it's bigger than ever.

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