Key Takeaways
- • Harvard's endowment withdrew some of its money from Eric Mindich's hedge fund, Eton Park Capital Management, earlier in 2017 following 2016 losses, according to people familiar with the matter.
- • Mindich said in March 2017 that he was closing Eton Park, a fund in which Harvard had invested $500 million in the 2000s.
- • New endowment chief N.P. 'Narv' Narvekar, who started in December 2016, is overhauling the $35.7 billion endowment, seeking to unload investments across private equity, real estate and natural resources.
- • Narvekar plans to cut the 230-person staff roughly in half by year-end 2017 and shift more assets to outside managers.
- • The board is pushing Narvekar to act quickly, and the pullback from Mindich signals a broader shakeout of Harvard's hedge fund relationships built on star portfolio managers.
Summary
Harvard's endowment has withdrawn some of its capital from Eton Park Capital Management, the hedge fund run by Eric Mindich, class of 1988, according to people familiar with the matter cited in the report. The redemption followed 2016 losses at the firm. In March 2017, Mindich said he was closing the fund. The move marks a sharp reversal for a relationship that once favored Mindich: after he left Goldman Sachs in the 2000s to start his hedge fund, Harvard invested $500 million, and Mindich later donated $15 million for scholarships and held a seat on the endowment board.
The redemption is part of a broader overhaul of Harvard's $35.7 billion endowment, the largest in higher education. Harvard has long sought to benefit from the investment expertise of its directors, employees and donors, yet its returns have lagged. The board has instructed N.P. 'Narv' Narvekar, who joined in December 2016 after more than a decade running Columbia University's top-performing fund, to rebuild the organization and its portfolio. In his first six months, Narvekar has sought to sell a number of investments across private equity, real estate and natural resources.
Narvekar has installed a new team, including three former Columbia endowment staffers and a chief investment officer he knew from the University of Pennsylvania. Working with surviving staff, they are reviewing the portfolio and identifying new managers. Narvekar plans to cut the 230-person staff in half by the end of 2017 and shift more assets to outside fund managers, according to the report. The 11-member board is pushing for speed, according to a person familiar with the matter. Harvard declined to comment.
The approach contrasts with Harvard's prior hedge fund strategy, which was built around star portfolio managers, many of whom had worked at the endowment in the 1990s. Under Narvekar, Columbia often pursued esoteric quantitative strategies. David Salem, chief investment officer of Windhorse Capital Management in Boston, said the change is an advantage for the university: "This is where it's to Harvard's advantage to bring in a new broom to sweep clean. It shouldn't matter what relationship a money manager has to the university."
The redemption is part of a broader overhaul of Harvard's $35.7 billion endowment, the largest in higher education. Harvard has long sought to benefit from the investment expertise of its directors, employees and donors, yet its returns have lagged. The board has instructed N.P. 'Narv' Narvekar, who joined in December 2016 after more than a decade running Columbia University's top-performing fund, to rebuild the organization and its portfolio. In his first six months, Narvekar has sought to sell a number of investments across private equity, real estate and natural resources.
Narvekar has installed a new team, including three former Columbia endowment staffers and a chief investment officer he knew from the University of Pennsylvania. Working with surviving staff, they are reviewing the portfolio and identifying new managers. Narvekar plans to cut the 230-person staff in half by the end of 2017 and shift more assets to outside fund managers, according to the report. The 11-member board is pushing for speed, according to a person familiar with the matter. Harvard declined to comment.
The approach contrasts with Harvard's prior hedge fund strategy, which was built around star portfolio managers, many of whom had worked at the endowment in the 1990s. Under Narvekar, Columbia often pursued esoteric quantitative strategies. David Salem, chief investment officer of Windhorse Capital Management in Boston, said the change is an advantage for the university: "This is where it's to Harvard's advantage to bring in a new broom to sweep clean. It shouldn't matter what relationship a money manager has to the university."
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.