The Harvard Endowment Is on the Verge of Losing Its Crown

For years, the Harvard Endowment has easily been the largest endowment of any university. But as of right now, it's at risk of losing its crown to the University of Texas. So what happened? It's a combination of things including organizational tumult, external controversies over the university, controversy about the endowment's model itself, and other factors. And of course, Texas has unique tailwinds -- including a huge energy windfall -- that aren't easily replicated elsewhere. On this episode we speak with Bloomberg's higher education reporter Janet Lorin about what's changed at this huge source of capital. Become a Bloomberg.com subscriber using our special intro offer at bloomberg.com/podcastoffer. You’ll get episodes of this podcast ad-free and exclusive access to our daily Odd Lots newsletter. Already a subscriber? Connect your account on the Bloomberg channel page in Apple Podcasts to listen ad-free. See omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:01Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 1:06Tracy Alloway?

  And I'm Tracy Alloway.

• 1:07Joe Weisenthal?

  Tracy, we talk about investing all the time on the show. We talk about private credit. We talk about hedge funds. We talk about the market itself. But you know, there are like a few of these gigantic institutional players out there. One of them is insurance that like just don't get a lot of attention.

• 1:24Tracy Alloway?

  These huge pools of capital. Yeah, you're right.

• 1:28Joe Weisenthal?

  So, you know, we've talked about, we want to talk about insurance more. Should probably talk about family offices more. Like that's this whole world that I don't think we've ever really explored, but just this massive and booming source of capital, like what the deal is with those.

• 1:43Tracy Alloway?

  Yeah, I remember right around the time that I left Hong Kong, that was such a big story, especially in Singapore, everyone opening family offices. But there's another category of massive pools of capital that we need to talk about.

• 1:56Joe Weisenthal?

  Absolutely. And that one, of course, is endowments. They're huge and they have, you know, they're distinct, they're distinct from banks, they're distinct from insurance companies, they have their own funding needs and their own funding profiles and the schedules with which they need to withdraw and disburse their money. And if you're a hedge fund, or if you're anyone else looking for money for your investment, at the end of the line, there's a good chance that like at some point, you're going to be knocking on the door of a really big endowment.

• 2:24Tracy Alloway?

  Yeah, so I'm really interested in kind of how that became a thing because of course, university endowments nowadays are known for making investments in things like private equity and hedge funds and stuff like that. And I'm curious how all of that began and then obviously how it's been working out.

• 2:43Joe Weisenthal?

  So you know what another cool thing Tracy has? At least when it comes to university endowments, I believe the endowment of my alma mater, University of Texas is on the verge.

• 2:54Tracy Alloway?

  I knew that was coming.

• 2:54Joe Weisenthal?

  Yeah, yeah, is on the verge of becoming the biggest university endowment in the country.

• 2:59Tracy Alloway?

  Right, so for years Harvard was the biggest, right? But it looks like it might be superseded by Joe's College. Congratulations, Joe.

• 3:08Joe Weisenthal?

  Thank you.

• 3:08Tracy Alloway?

  Have you been donating? Is this all you?

• 3:11Joe Weisenthal?

  Can I just say, I don't, I've never donated. They have so much money already, they don't need my donation. I probably should. I don't want to talk about how I avoid the calls from my university. And I don't know, I feel a little bad about it.

• 3:24Tracy Alloway?

  I think in this case, well, we'll get into why, but maybe it's okay not to donate. Well, we'll talk about it.

• 3:31Joe Weisenthal?

  I don't really want to talk about it. I don't really, you know, and even talking about how big UT is versus, I think there's actually like 22 universities or something served by the Texas Endowment and other things. So I don't even know if it's a true apples to apples comparison. Because you know, the student body of Texas is so gigantic. Nonetheless, if we're just looking at, okay, which university endowment is the biggest? At least currently, there's a very good chance it looks like the Texas could eclipse Harvard on that front. So we got to understand what's going on more in endowment world. And then the other thing is not just that Texas has grown and that's great and I love to see it, but that Harvard's performance has been a little bit mediocre in recent years, even compared to just other Ivies, the rest of which sort of smaller.

• 4:14Joe Weisenthal?

  The Yale Endowment is sort of famous, actually not necessarily due to its size, because, but because of its longtime managers' approach to endowment investing. So we got to learn more about what's going on with Harvard and what's how these big institutional pools of capital, how they're performing and what they're doing.

• 4:30Tracy Alloway?

  Yeah, it is kind of funny that the Harvard endowment, which presumably employs a lot of highly paid, smart people. I think it was up about 9.6% in 2024. That's the preliminary fiscal year. But of course, the S and P 500 is up like 22% so far. So yeah, what's going on?

• 4:52Joe Weisenthal?

  Just by SPY. No, like people will say, oh, you can't really compare. People love to say, people love to say you can't compare things. Oh, you can't compare hedge funds return of S and P. You can't compare endowment funds return to the S and B. Maybe that's true. I don't totally get why. Anyway, should we learn more?

• 5:07Tracy Alloway?

  Let's do it.

• 5:07Joe Weisenthal?

  Well, I'm really excited to say we do have the perfect guest, someone here at Bloomberg, who I've wanted to speak to on the podcast for a long time. We're going to be speaking with Janet Lauren, higher education finance reporter for Bloomberg. Janet, thank you so much for coming on Odd Lots.

• 5:21Speaker 04

  Thanks for having me.

• 5:22Joe Weisenthal?

  How do you get to be the higher ed finance reporter of Bloomberg? And also, it's like, we just have one. Like, what's the deal? These institutions are so important. We probably have, you know, 20 people covering hedge funds. We just have a higher education finance reporter?

• 5:36Speaker 04

  Well, I've been writing about university finances for almost 17 years here at Bloomberg. And it's not just endowments, but I used to write a lot about student loans back when they were only about a trillion dollars in outstanding debt and college admissions and endowments. And it's just a fun job and there's a lot of money involved and there's a lot of nuance that most people have no idea about. And it's, I'm thrilled to talk about Harvard as well as University of Texas. It has an amazing story.

• 6:04Joe Weisenthal?

  Great.

• 6:05Tracy Alloway?

  Okay, so talk to us a little bit more about how significant the space is. Like, how much money are we actually talking about?

• 6:12Speaker 04

  Off the top of my head, and we're talking about several hundred billion dollars. The universe is, you know, there aren't too many college endowments that have over a billion. Maybe it's around 50. I can, I can get you the exact number. But there certainly aren't that many the size of Harvard and Yale and the University of Texas. And Harvard. I include in many stories is the oldest and richest university. You know, it goes back to the 1600s and Harvard was actually founded, you know, through a donation. And as, you know, donors, alumni, rich people in Boston gave them money over hundreds of years. You know about that thing called compounding interest?

• 6:51Joe Weisenthal?

  Yeah, imagine if you just bought SPY in 1600. Sorry, keep going.

• 6:55Speaker 04

  So that has certainly helped them, but in the 1960s, college endowments started doing something different instead of having a traditional 6040 split, you know, with a lot of plain vanilla type US equities, bonds. They pursued a different model and the Ford Foundation actually presented this strategy in, in schools like Harvard and Yale started using it because their time horizon is literally in the hundreds of years. So they, liquidity for them is okay because, you know, they have a very long-term horizon. So they started moving things into illiquid assets over time, private equity, hedge funds,

• 7:38Speaker 04

  you know, eventually venture capital, real estate, you know, now private credit. But at the time, that was a pretty new strategy. Harvard and Yale did things a little bit differently. So Harvard started, you know, Harvard Management Company, which, which runs the endowment is 50 years old this year. They actually operate not in Cambridge, but in downtown Boston in the Federal Reserve Building. It's actually very close to our Bloomberg office in Boston. And they employed traders and it was, you know, over 200 people working there. They were extremely good at their job. Their strategy was literally the envy of the world. They made a ton of money. A guy by the name of Jack Meyer ran the fund and there was some outcry by a group of alumni

• 8:22Speaker 04

  and people who thought they were, their managers were being paid too much because they just consistently exceeded the market. And one year there was a manager, I'm trying to remember, who paid $35 million and people were just aghast at that because they made too much money. So after a lot of criticism, long story short, that model Was disbanded. Jack left in 2005. They went through a succession of managers. Seven CEOs of the Harvard management company. Some only stayed a short term. There were two, less than two years, several interims, changing strategies, selling off assets. You know, for a while they were big into agriculture and real assets.

• 9:07Speaker 04

  Those performed well, but then they didn't perform well. And the current CEO has been there since December 2016. He eventually sold a lot of those natural resources, you know, I think writing off like a billion dollars. And, you know, change of strategy, not at the greatest time. They didn't have a lot of private equity and they've ramped that up now.

• 9:26Tracy Alloway?

  That was a great potted history of Harvard's endowment. I ought to say, Joe, I started rewatching. Did you ever watch the Gilmore Girls? Probably not.

• 9:36Joe Weisenthal?

  No, I never did.

• 9:37Tracy Alloway?

  I started rewatching Gilmore Girls and so.

• 9:39Joe Weisenthal?

  Are you going to tie this in?

• 9:40Tracy Alloway?

  Well, so it's all about rich people in Boston, basically. And one of the main characters has to decide between Harvard and Yale. She eventually goes to Yale. I guess she was lured by the performance of the endowment.

• 9:56Joe Weisenthal?

  So Janet, you gave us the broad history of Harvard's endowment. And I want to talk about actually like what happened in those years from like how you have one stable management company that goes all the way to 2005, more or less. And then you run through, I think, what did you say, like seven CEOs since then or something? And then Tracy mentioned the Yale endowment with their famous endowment manager for several years, David Swinton. Can you talk about like the sort of compare and contrast between the strategic volatility? And I'm not even talking about price volatility, but the strategic management volatility of Harvard versus the Yale model that I think David wrote a whole book about.

• 10:33Speaker 04

  So Harvard management company files a tax return and because of their nonprofit status, they have to disclose how much they pay their top people. And Yale, the investment office is part of Yale University. They employ outside managers and they have a much smaller number of employees and only a handful of listed. In the tax return and because they're using outside managers, you know, you think of the two and 20 model.

• 10:59Joe Weisenthal?

  Yeah.

• 10:59Speaker 04

  That's not showing up in the tax return, whereas Harvard. You know, you could see how much they were getting paid and people read that and it was a big deal how much they were getting paid. And, you know, that's really a simple explanation of why Harvard's managers got so much more scrutiny.

• 11:15Tracy Alloway?

  So you talked about the criticism of, you know, how much they're getting paid. What's the benchmark for Harvard's performance? Like, what are they actually comparing themselves to?

• 11:27Speaker 04

  Well, many endowments create their own benchmark.

• 11:29Joe Weisenthal?

  Surprise.

• 11:30Speaker 04

  So I don't know, you know, they come up with it. And one of the big criticisms of Harvard's pay was the managers who did extremely well in their own asset class would get paid based on their own performance, not the overall performance of the endowment. So if they had a middling return, which they have, some of these managers still got paid quite a lot of money.

• 11:50Joe Weisenthal?

  Well, then let me ask you another question. Let's say, okay, we don't really know what the benchmark is. So you wrote this piece for Bloomberg a few weeks ago, talking about like issues and the performance. What has it been? Why now are people saying, look, Harvard's performance is not that great. There's some reason to be concerned. There's some falling off in the what they're able to generate for the universe.

• 12:12Speaker 04

  Well, I think some insiders, especially, you know, some of their really famous economists, they know what's going on. But in the last year, the performance was overshadowed by some other issues, especially, you know, their president being thrown before Congress. You know, the president resigned, she had a plagiarism scandal. People have been very upset about how Harvard has handled antisemitism. The story I had last week said their fundraising was down, you know, their cash gifts was the lowest in 15, it fell 15%. It was the lowest since 2015. You know, they famously raised a huge amount of money. You know, they're known for the endowment, but they're also known for being prolific fundraisers. And, you know, they, they did get to a billion dollars last year, but I'm sure it wasn't

• 12:56Speaker 04

  easy, considering people are upset. Len Blavatnik, Ken Griffin, both alums said they're not giving money, they've paused their gifts to Harvard because of the way things are going there.

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• 14:59Tracy Alloway?

  So, one thing I'm trying to wrap my head around is, as we've mentioned a number of times, Harvard is a huge pot of money. And I've heard people say stuff like, because of its size, it makes it harder to move positions around. It can't be as nimble. But then, I think, well, it's huge, so it should be getting like the best deals. It should have some sort of edge. So is size here a net pro or con?

• 15:28Speaker 04

  I think that's a very fair question and Harvard will say it's so big, it's hard to manage $53 billion. Now, keep in mind, the size hasn't been that big ever. They had a huge $11 billion gain in fiscal '21, when everybody had a crazy year. Some endowments had gains of 50%. Harvard was on the low end at 34%. And of course, they had a huge decrease during the financial crisis, so they've been building back up. Now, the school with the best 10-year performance is Brown, and that has the smallest endowment size. And they're definitely more nimble, but they seem to take more risk. You've heard, maybe

• 16:09Speaker 04

  there are some cryptocurrency, or there's some other risk there. And if you go back and read all the Harvard alumni, I'm sorry, the Harvard financial reports, as I did, the current CEO talks a lot about risk. He mentions more than once that Harvard takes less risk than its large peers. And it still could be a vestige from 2008, when they had a huge liquidity problem.

• 16:34Joe Weisenthal?

  Let me ask another way of thinking about the benchmark. Sitting aside, what is a good return in a given year, or a good return over five years? What is the importance of the Harvard endowment to the Harvard University budget? And because there's multiple ways of financing the university, there's tuition, there's alumni giving, there's probably other grants and stuff like that, and then there's the money that the endowment throws off. What does Harvard University need from the Harvard endowment?

• 17:04Speaker 04

  Well, the Harvard endowment is the largest provider of money to the university, 37%. And that's grown over time. 10 years ago, it was 31%, and 20 years ago, it was 21%. So, in other words, Harvard University is becoming a lot more reliant on the Harvard endowment.

• 17:26Tracy Alloway?

  So you mentioned this idea of investing in alts and I think Harvard was like a backer of D1 in particular, a hedge fund. And I'm curious, the sales pitch from hedge funds is always uncorrelated returns. So what happened in down years for Harvard, like in 2022, 2023, when markets were like, or sorry, in 2023, when markets were falling, did they manage to post above average returns?

• 17:59Speaker 04

  So over time, in 2023, I think they had a 2.9% gain, which was not bad, you know, among the Ivy League schools. A couple of big endowments had losses. I think it was Duke and MIT and MIT is really strong in their returns too. That we don't sort of use them in their eight schools because, you know, the Ivy League is a sports conference, but it's also a nice group of eight schools that you can easily compare. And Harvard, you know, in the big year where the in 21, they were below average in the Ivy League. Now, they didn't traditionally have the allocation to private equity and VCs that say Yale did. And Harvard is now at 39% in private equity, but they've ramped up really since 2016. I'm

• 18:44Speaker 04

  sorry, it was 16% maybe five years ago, six years ago, and now they're at 39%. So they've been ramping up sort of not at the best time. And keep in mind that Yale has been investing in some of these private equity firms and VC for years and years and years. And people really want to be Yale's partner. And Harvard sort of has a reputation of not being the greatest partner because as you saw in the D1 example, you know, they sell and, you know, they had to unload, you know, a billion dollars worth of natural resources assets. So people clamor to be, you know, in the Yale and the Princeton endowment because they're seen as just amazing partners and Harvard doesn't seem to have that same reputation lately.

• 19:25Joe Weisenthal?

  Yeah, I mean, I don't know that much about the Yale endowment model, but the, and I probably should read David Swinson's book at some point and all that and really learn about it. But I do get the impression. That it's designed to just be not set it and forget it, but like truly it's all about that sort of all cycle portfolio, right? That really can just is designed to ultimately work across a long cycle of whatever's in and out.

• 19:51Speaker 04

  Well, they will look at firms for years before they may make an investment. So they tend to do their homework for a long time. And there, I think I remember in one report, they said the average tenure of their outside managers is something like 13 years.

• 20:06Joe Weisenthal?

  Wow.

• 20:07Speaker 04

  So it's, you know, if you think getting into a school like Yale or Princeton is hard, try getting to be one of their managers.

• 20:14Joe Weisenthal?

  Well, just actually, and I want to get into this more, but just a very quick question. Does Harvard have hedge fund allocation?

• 20:19Speaker 04

  Of course.

• 20:20Joe Weisenthal?

  Oh, yeah. You're already talking. Okay, got it.

• 20:22Speaker 04

  They do.

• 20:22Joe Weisenthal?

  Okay.

• 20:23Speaker 04

  And it's the second largest allocation. Now it's at 32%. The largest allocation is private equity at 39%.

• 20:29Joe Weisenthal?

  And just a very, very short question. If Tracy and I are starting a hedge fund, and it's like a multi-strategy hedge fund and all that stuff, would Harvard definitely be one of our stops when we're trying to look at raising money?

• 20:42Speaker 04

  Did you go to Harvard? I'm just kidding. I don't know. It just depends. They like nichey, really nichey stuff.

• 20:52Joe Weisenthal?

  Got it.

• 20:52Speaker 04

  So if you're, you know, peddling something like a Japanese something fund that is really nichey that nobody else is doing, maybe.

• 21:00Tracy Alloway?

  So you mentioned the sort of turmoil at the upper levels of the Harvard endowment. And I think we're on the fifth CEO in like 11 years, something like that. Can you describe the new CEO? Like, where does he come from? And is his style different to predecessors? I think he's done some restructuring of the company and things like that.

• 21:26Speaker 04

  Yeah. So he came in December 2016 from Columbia where he had excellent performance. And that was one of the reasons why he was hired, because, you know, the performance at Columbia used to be pretty good. But he came in and had to steer a very large ship in a ship that's very scrutinized. Everybody wants to know how Harvard. Is doing. And as I mentioned before, they used to employ more than 200 people traders in they had a different model than Yale because they had a huge internal, you know, presence. And they slashed that. He also reversed course on natural resources where that had been a huge

• 22:07Speaker 04

  interest of Jane Mandillo, the previous longer term CEO of Harvard management, but they didn't do as well. So he sold a lot of those off. They restructured pay. Again, we talked about, you know, if you're a manager and you did great in your own asset class, you would get handsomely rewarded. But if the endowment as a whole was not performing well, that didn't really matter. So he made a lot of changes.

• 22:31Joe Weisenthal?

  Let's talk about, actually, you mentioned natural resources, which could be code for a few things. So I seem to recall, I just remembered another thing that I remembered about David Swensen, which is I think he was like really into timber for a while. And he was like, sort of like famously into timber. But then there's another natural resource issue, and this will eventually allow us to talk about what I really want to talk about, which is the University of Texas. But of course, resource politics and resource investing is also always controversial when it comes to, you know, carbon fuels like oil and stuff like that. So before we get into Texas and all their oil money, what is the status of Harvard's own investments in things like oil, etc.? And how does like the sort of unique politics of Harvard affect those choices?

• 23:16Speaker 04

  So for a long time, most schools, you know, were asked by their students to divest from anything related to fossil fuels. Harvard did not divest from anything. I think sometimes that's not understood. Well, divest means selling things. And Harvard said, we're not going to make new investments. So you know what it means to allow things to roll off. You're not going to make, you know, when this next private equity fund is raising money, that means they may not go into it. They're not selling on the secondary market. You know, typically endowments don't have direct holdings, or, you know, maybe they have a tiny amount, maybe it was a gift, and they still have held on.

• 23:57Speaker 04

  On to it. But typically endowments today do not have direct holdings in companies. That's how they used to in, you know, in the seventies and eighties and in the eighties, when you heard about schools divesting from, you know, investments related to apartheid. They were literally selling US companies that operated in South Africa. So that's a huge change. So they stopped making new fossil fuel investments. And Narv wrote in one of the reports in 22, when they had a loss, the CEO said Harvard had missed out on strong returns in the energy sector. And that decision contributed, you know, marginally to the loss that year. But at the same time, you look at a place like Texas,

• 24:38Speaker 04

  which has huge amounts of cash coming in because of oil. And let's, is this a good time to bring up their history?

• 24:46Joe Weisenthal?

  Yeah, yeah, let's, yeah, there's a good one.

• 24:47Tracy Alloway?

  Yeah. Where does the, how did the oil money kind of start?

• 24:51Speaker 04

  So it was kind of a fluke in a luck, lucky stroke of history. In the late 1870s, the state of Texas set aside land for higher education. And it was supposed to be near the railroad, but it was too valuable. And it got moved to West Texas. And eventually higher education in Texas was allotted something like 2.1 million acres in West Texas. And they were supposed to generate money by agriculture or grazing rights. And they, the plan was eventually to sell it. But then in 1923, something happened. Joe, do you know what happened?

• 25:29Joe Weisenthal?

  Well, black gold struck. No, there's a, they're at the University of Texas campus. There's this little, I don't know if it's still there, but it was there like, yeah, 20 years ago, there's this little like sort of, I don't know, exhibit. And they played this audio, it's like spindle top, black gold. And it has like, with this like really like exaggerated Texas accent. And there's like a fake oil Derrick or oil well or something like that. It sort of shows like where it all came from.

• 25:55Speaker 04

  So in 1923, they literally started getting all this revenue from oil. And I did a story a couple of years ago. I went down to Midland and I went on, on the land. And that year, they got something like $2 billion in cash. And it's, it's, it's completely separate from their endowment. It's not generated from investments. It's just cash that comes in. And the crazy thing about it is, you know, they're, you know, you hear, oh, well, at some point, energy is not going to be, you know, is not going to be as valuable, which, you know, it's still going to be around for 20, 30 years, generating a lot of money for Texas. But they're in the best position for wind and solar also, which is a really nascent industry there.

• 26:40Speaker 04

  But, you know, when, when you're ready for that, they're going to make a lot of money, too.

• 26:44Tracy Alloway?

  It is kind of crazy to think that that decision to set aside land in like the 1800s is really paying off now. So every once in a while, Joe will tweet something about the Texas Longhorns, the football team. And so one thing I'm curious about is, we're talking about all this money that's flowing into universities. What's the breakdown of like where colleges get their money? So I imagine it's a mix of donations, returns from endowments. Are sports like part of that, too?

• 27:17Speaker 04

  I don't think it's a huge amount. I mean, unless you're, you know, one of the schools like Texas that actually makes money on sports. But it's a very small number of schools actually collect, you know, somewhat of a, I don't want to say a profit, but generate revenue. But, you know, many schools have weird histories of how they made their money. Like Emory, for example, in Atlanta, they're one of the richest schools. And part of the reason is because of the Coke stock that was given to them and they eventually sold. Northwestern is one of the richest schools because a drug called Lyrica was developed in the chemistry department. One of their presidents, a few years, a few presidents back, decided to sell half of the royalties.

• 27:59Speaker 04

  And that's, you know, why they had, why they became one of the richest schools.

• 28:03Joe Weisenthal?

  Sorry, I'm just thinking more about that little exhibit on the Texas campus. There's the other thing they're like, black gold, Texas tea, which they also said, I love that Texas tea.

• 28:13Speaker 04

  Why didn't we go see that exhibit?

• 28:15Joe Weisenthal?

  Yeah, I don't know, but it's like one of those things where it's like, if you're a college student, you're like walking around and you may be like drunk at 11pm at night and you're like walking through campus, like you stop there and the audio is playing, if I recall, like 24/7 next to this pump.

• 28:29Speaker 04

  I'm sure you're not speaking from personal experience.

• 28:32Joe Weisenthal?

  Not really, but that's like a thing that you do. Okay, I get like Texas has this big advantage because of this fluke gift from over 100 years ago and they discovered all the oil and you know, and the wind and solar coming up. But like, it's not just that, they've done a good job too, right?

• 28:47Speaker 04

  Well, they're huge. I mean, it's a huge campus and initially that money only funded two campuses, UT Austin and we can't forget about Texas A&M in College Station. They share, they share that land, two thirds goes to University of Texas at Austin, one third goes to Texas A&M. And they pool that money together and it's invested in a company called UTIMCO. They followed the Harvard management company model and they created a separate company. And UTIMCO is based in Austin and you know, if you're a hedge fund and you're visiting, you know, the big Texas pension funds, UTIMCO is there in Austin, so it would just be another place.

• 29:28Joe Weisenthal?

  So Tracy, because of my Texas roots and we're starting our odd lots multi-strategy hedge fund, we would stop at UTIMCO rather than Harvard. That would be our first stop rather than Harvard, it sounds like.

• 29:38Speaker 04

  You just want to go to Texas.

• 29:40Joe Weisenthal?

  Yeah, but I also want the money.

• 29:41Speaker 04

  Yeah, okay. One thing I'm wondering is, so endowments are invested heavily in private equity, which we talked about, and it feels to me like there's a little bit more criticism of private equity right now than there used to be. There was a big piece in The Guardian about how private equity is like ruining the economy and things like that. Do you think there's going to be any pressure to divest from PE? Well, I don't know that they would want to sell anything on the secondary market, but they, you know, perhaps, you know, they may not want to re-up and increase their allocation because at this point, they're quite large. You know, Harvard and Yale and Princeton, they're all around the 39% ish percentage. And part of the reason is, again, I keep going

• 30:25Speaker 04

  back to 2021, when they had these crazy returns, but, you know, the value of their private equity books just really increased with those returns. So, you know, it's just a, it's a bigger share of their endowment. And plus, you know, they've had great returns up until recently. And, you know, when you think of when David Swensen started investing in private equity decades ago, there wasn't that much money. So it was easier to get crazy returns as they did.

• 31:07Speaker 01

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• 31:45Joe Weisenthal?

  So where are we in terms of the biggest, how close are we towards my UTIMCO eclipsing Harvard management company? Like, what do we talk about here?

• 31:54Speaker 04

  Well, it's hard to tell. I mean, if you look at how Harvard did in the last 10 years in their annualized returns in the year that ended 2023, they were in the bottom 20%. So it's hard to tell. I mean, if you get another banner year with energy and they keep getting, you know, a couple billion dollars in cash.

• 32:12Joe Weisenthal?

  But like, how many, how much literally is the gap? Like, what do we know in terms of their size?

• 32:16Speaker 04

  I don't know if I've seen what UTIMCO's size is right now, but, you know, a couple billion here and there.

• 32:21Joe Weisenthal?

  So we're close?

• 32:23Tracy Alloway?

  Okay, so the other thing that's going on, speaking of public criticism, is some of the Israel-Palestine controversy that's happened at Harvard over the past year. Talk to us about that and what impact that's been having on donations.

• 32:40Speaker 04

  So Harvard has been at the forefront of protests on campus. Like many schools, they had encampments. Theirs ended in the spring without police arrests. I think everybody was very happy about that. But there was a tremendous amount of criticism over the last year about how they've handled antisemitism on campus, protests, encampments. And alumni really mobilized and said, we're not donating. And alumni, very wealthy ones, like Lynn Blavatnik, and just sort of your average Harvard alum, said, we're not going to do this. And they're known for being amazing fundraisers. They've raised over a billion dollars every year since 2014.

• 33:24Speaker 04

  They usually raised the most, although Stanford has raised more in some years. And donations were down 15% in the year ended in June. And when you think about when they were in the news so much at the end of December, remember there was that congressional hearing in December 5th with the presidents of Penn, MIT, and Harvard? They were in the news nonstop until the end of December. She ultimately stepped down Claudine Gay, the president, on January 2nd. But when do most people make their gifts to colleges? They make their gifts at the end of the calendar year. And that was not a great time for Harvard.

• 34:06Joe Weisenthal?

  I just have one last question, and it's a little bit philosophical. Am I bad for not donating to my college? I had an amazing time at Texas. I mean, seriously, I had an amazing time at Texas. Nothing I actually learned led directly to a job, but it was a formative experience. I look back on it fondly. I've been very fortunate in my career since then. Many good things that have happened in my life were roughly from that time that I spent there. Like, should I think about this differently? Because when I look at it, it's like, they have tons of money. They don't really need any more. Like, pitch me that it's a good idea.

• 34:42Speaker 04

  Well, do you want to help students have a similar experience that you do?

• 34:46Joe Weisenthal?

  Yeah, but they have tons of money.

• 34:47Speaker 04

  I don't know, maybe there's something in particular, you can tailor your donation to something specifically. I mean, and that's one of the things-

• 34:54Tracy Alloway?

  The podcast course.

• 34:55Joe Weisenthal?

  Yeah.

• 34:56Speaker 04

  Well, that's one of the things that Harvard complains about is a lot of their money is, they say is restricted.

• 35:01Joe Weisenthal?

  Oh, yeah, right.

• 35:02Speaker 04

  So if you give money to the crew team, they can't spend it in theory on the tennis team.

• 35:06Joe Weisenthal?

  Right.

• 35:06Speaker 04

  So you could say, I want to, you know, I want to give it to something and then there you go. It could be named after you if you want.

• 35:16Joe Weisenthal?

  Yeah, maybe a little podcast studio at the J school.

• 35:20Tracy Alloway?

  There you go.

• 35:20Speaker 04

  Jowaisenthal Podcast.

• 35:22Joe Weisenthal?

  Yeah, all right.

• 35:22Speaker 04

  There you go.

• 35:23Joe Weisenthal?

  Maybe, maybe that could work.

• 35:24Speaker 04

  And they, you know, one thing about these gifts is, you know, they're multi-year, so you could make up pledge over 10 years or whatever the case, but-

• 35:32Joe Weisenthal?

  I'm open to changing my mind on this. So I just, but you know, I wrestle with it because I, just between the three of us here in the room, like I think I have the number that like they call me on, like I either have it blocked or like I have, like it says, like, do not answer. But I'm open to, I'm open to like-

• 35:48Speaker 04

  That's kind of cruel. That's kind of-

• 35:50Joe Weisenthal?

  Yeah, I know. That's what I'm saying. I have a little issue. I have, I have some misgivings and I'm open to rethinking this question at this stage of my life. Janet Lauren, thank you so much for coming on. I really appreciate it.

• 36:01Speaker 04

  Thanks for having me.

• 36:02Joe Weisenthal?

  It was a lot of fun. Thank you so much.

• 36:03Speaker 04

  Thank you, Janet.

• 36:16Joe Weisenthal?

  Tracy, I am going to use this podcast for the most nakedly egregious self-serving purpose ever right now. And I just want everyone to be aware of that. Okay?

• 36:26Tracy Alloway?

  Wait, is it urging listeners to continue to support the pod so that you can make donations to students?

• 36:33Joe Weisenthal?

  No, no, no. I'm like open to rethinking my philosophy on donations because I probably, when I blocked the number, I was like, you know, much younger and earlier in my career. No, you know what I've thought? I can't believe I'm going to say this out loud. I've thought- That a nice, I quote, retirement job for me would be being some sort of adjunct professor at the Journalism School at UT. And like, you know, I've done a lot in digital media and like, maybe through donations or something, find a way back into that community.

• 37:03Tracy Alloway?

  Yeah, start laying the groundwork now.

• 37:05Joe Weisenthal?

  Yeah, basically start prepaying my salary. Make a bunch of donations so that, you know, 20 years from now, when we stop doing odd lots, there's like this pool of money that can fund my adjunct degree.

• 37:16Tracy Alloway?

  Yeah, absolutely.

• 37:17Joe Weisenthal?

  Anyway, but maybe someone will hear that and like, reach out. I'm just saying.

• 37:22Tracy Alloway?

  Oh, don't go to Texas, Joe.

• 37:24Joe Weisenthal?

  No, I'm not going to. I'm just, yeah, no, well, okay. But I, but yeah, maybe someone will listen and at the University of Texas Journalism School and hear about my career ambitions.

• 37:34Tracy Alloway?

  In 20 years, hopefully.

• 37:35Joe Weisenthal?

  In 20 years, yeah. You know, one other thing, though, for real, though I think is really interesting about this, and I hadn't realized, is the difference in the corporate structure between the Harvard Endowment and the Yale Endowment.

• 37:47Tracy Alloway?

  Yeah.

• 37:48Joe Weisenthal?

  And so you can, and so anyone can just look at the Harvard Endowment and say, oh, why are you paying all these people so much? Have you heard passive is the future, all these fees? And yet you could have another institution that's doing fantastically, and no one sees how much they're paying managers or how much individual star traders are getting because those independent star traders are at the hedge funds that no one actually gets to see because they don't file some independent return.

• 38:11Tracy Alloway?

  You know, speaking of transparency, I saw this really great chart in the Harvard Crimson, the student newspaper, and it's the word count of the annual message.

• 38:22Joe Weisenthal?

  I love that.

• 38:23Tracy Alloway?

  From the Harvard Management Company CEO, the Endowment CEO. And I think it used to be like over 3,000 words typically, and now it's gone down to a little over 1,000.

• 38:36Joe Weisenthal?

  Oh, interesting.

• 38:37Tracy Alloway?

  So that's, that's where a lot of the criticism of lack of transparency at Harvard comes from.

• 38:42Joe Weisenthal?

  Yeah, well, you just get rid of all, you know, don't have any in-house traders talking your thing. And you just, you let the third-party managers, the hedge funds be, let them write the words and the letters. That's, that's their job is to write words in the letters.

• 38:54Tracy Alloway?

  That's right. Shall we leave it there?

• 38:55Joe Weisenthal?

  Let's leave it there.

• 38:56Tracy Alloway?

  All right. This has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 39:04Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at theStalwart. Follow our guest Janet Lauren at Janet Lauren and check out her recent big take on the Harvard Endowment on Bloomberg.com. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashell Bennett at Dashbot, and Cale Brooks at CaleBrooks. And thank you to our producer Moses Andam. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have transcripts, a blog, and a newsletter. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 39:33Tracy Alloway?

  And if you want more Odd Lots content, you should check out an offer that we have running right now. You can become a Bloomberg subscriber at a special introductory rate. All you have to do is go to Bloomberg.com/podcastoffer and then click on the link in the show notes. And if you do that, you will get ad-free Odd Lots episodes as well as access to our new daily newsletter. Thanks for listening.

• 40:35Speaker 07

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