It's the cover story, Missing Billion, by Lisa Provence in this week's Hook.
Provence very carefully explains the history of the endowment's investing, defines hedge funds and private equity, and explains how UVa lost $1B.
No Wahoos are talking except in official printed statements, but others are. Blogger Henry Blodget at Clusterstock.com explains the potential ramifications:
"JP Morgan wealth-management strategist Michael Cembalest summarizes the situation:
The endowment's value as of October 2008 is $4 billion, and they have $1.6 billion in uncalled private equity, real estate and natural resource commitments on top of $1.4 billion already invested. [That's 75% of the endowment pledged to highly illiquid investments].
The endowment has now announced plans to sell not only public equity, but also several hundred million from hedge funds at a time of illiquid markets, and to explore selling their private equity in the secondary market (a "market" which only exists in the narrowest sense of the word; there's around $15 billion in buy side funds looking for very steep discounts).
Endowments like UVA's make annual contributions to a university's operating budget, so a portfolio with a 75% allocation to private funds (holdings plus future commitments) is a very aggressive one.
Sorry, UVA alumni. You're going to have to make those gifts all over again."
President John Casteen recently addressed the issue, sort of, in this statement to the community. Exec VP and COO Leonard Sandridge attempted to allay concerns in this press release.Read UVIMCO's disastrous Third Quarter Report here.
See the Clusterstock.com post UVA: Sorry, Alumni, We Gambled Our Endowment and Lost.
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If they thought the third quarter was bad, I wonder what the fourth quarter-to-date results look like? The worst of the market's decline happened post-Sept. 30.
I'm thinking layoffs, elimination/delays of large capital projects, etc. are ahead of us.
Spin it as the administration will, there's just one phrase to describe what's coming our way:
We're F*cked.
If UVA's endowment fund performs in this fourth quarter like its football team usually performs in the fourth quarter, the Cavs are in trouble.
Maybe Al Groh can manage the fund and Mr. Brightman can coach the team.
If you read the UVIMCO report, which is linked in this post, you'll see that AFTER the $1B was lost, there was an additional 20% loss.
This is horrifying and absolutely shameful. It's the greediest kind of investing possible. Although this entire downturn took all of us by surprise--including bernanke and paulson--there's no reason that the Endowment should have been put at such risk. Reasonable finance experts know high returns are only possible in bubbles.
I would have hoped for more from Mr. Jefferson's University.
In Cville it's still a great time to buy a house.
This kind of crazy thinking extended would lead the UVIMCO investors to believe It's A Great Time To Sell Off.
DOW DROPPED 445 POINTS TODAY
And yet...we still have an overabundance of irrational optimism from the clever seller of MLS# 459503 which was just listed. The really great thing is the $519000 price tag is just the tip of the iceberg. The house also needs renovation:) Grab your checkbooks and hurry because this one will NOT last long. FYI it sold for $73000 in 1980.
This is a price "adjusted" to reflect current market conditions. LOL. Last year, it would have been at least 100K more.
While the street is a lovely one, the house itself, in need of renovations, is not.
The agent is doing the seller, or the owners' heirs, a real disservice indicating that anything near this asking price is possible.
And anybody who buys it at a time like this, or near this price, hasn't adequately researched this market, nor paid attention to local, regional, national economies.
MLS# 459498
$220K price reduction
The house actually HAS THE BYPASS AS ITS FRONT YARD.
Listing sez: "this is a good value".
I feel ashamed for the seller & agent.
"price reduction" meaning it's now 220K but was slightly higher a few weeks ago
I found Casteen's statement frightening and bizarre. Harvard's letter, by contrast, reveals that intelligent planning is taking place, rather than reckless disregard for sound financial principles: http://www.boston.com/news/local/breaking_news/2008/12/harvard_letter.html?p1=Well_MostPop_Emailed7
Maybe Wachovia wishes now they hadn't put Casteen on their board.
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