<p>PE funds generally did pretty well up until the mid 2000’s. As with any other successful investment strategy money piled into PE then, created a bubble with PE funds over-paying, then 2008 hit. Point is 2/3rd of endowment PE money is tied up in 2004-08 bubble funds and the big question is how are the PE funds going to exit from these investments that are very, very leveraged.</p>
<p>[Private-Equity</a> Firms Under Pressure To Exit Investments - Bain - WSJ.com](<a href=“http://online.wsj.com/article/BT-CO-20120302-711001.html]Private-Equity”>http://online.wsj.com/article/BT-CO-20120302-711001.html)</p>
<p>Bain Capital admitting that the return of capital from 2005 funds onward in the overrall industry has been “glacial”. Less than 20% of invested money returned from 2005 funds.</p>
<p>I agree with kayf, doubling assets in 10 years means nothing if you can only get 30c on a dollar when you sell.
That’s the scary part of PE. You don’t really know how much your asset is worth until you liquidate, then you’ll be surprised.</p>
<p>[Harvard</a> holds onto PE assets - The Term Sheet: Fortune’s deals blog Term Sheet](<a href=“http://finance.fortune.cnn.com/2012/03/09/harvard-holds-onto-pe-assets/]Harvard”>http://finance.fortune.cnn.com/2012/03/09/harvard-holds-onto-pe-assets/)</p>
<p>Second time Harvard has tried to sell PE assets and not gotten a decent price. Article kinda confirms public market for PE is closer to 70 cents on the dollar right in line with what Conversus capital is selling for.</p>
<p>Its pretty clear that none of this stuff is worth what its being carried at. These endowments are worth much less than stated, and are likely to be worth even less as they hold on waiting for a recovery.</p>
<p>Nice article, sm74.</p>
<p>[Hedge</a> Fund Profits](<a href=“http://www.businessinsider.com/hedge-fund-profits-2012-3]Hedge”>Hedge Fund Profits)</p>
<p>The green slice is what endowments get. Why there are so many hedge fund/private equity billionaires and not so many billionaire investors in alternative investments.</p>
<p>[THE</a> TRUTH ABOUT HEDGE FUNDS: They Win And You Lose](<a href=“http://www.businessinsider.com/the-truth-about-hedge-funds-they-win-and-you-lose-2012-3]THE”>THE TRUTH ABOUT HEDGE FUNDS: They Win and You Lose)</p>
<p>another interesting take on the hedge fund pie</p>
<p>[03/27/12</a>, Trustees: $350 Million of Indebtedness (2012 Bonds) for Energy-Efficient Projects - Almanac, Vol. 58, No. 27](<a href=“http://www.upenn.edu/almanac/volumes/v58/n27/trustees.html]03/27/12”>03/27/12, Trustees: $350 Million of Indebtedness (2012 Bonds) for Energy-Efficient Projects - Almanac, Vol. 58, No. 27)</p>
<p>More TAXABLE debt
$350M to Penn for what looks like normal maintenace stuff that should be in the operating budget
$215M to Stanford-what I don’t get about Stanford is they just finished a capital campaign in which they supposedly raised $6.2billion. Am I missing something-why would they need to borrow $215M when they just raised $6.2Billion.</p>
<p>Rates are low? Earn a spread?</p>
<p>4th but they arent investing the money they are spending it on “deferred maintenance”.</p>
<p>Fungible?</p>
<p>Hey, I am just trying to give them the benefit of doubt …</p>
<p>
</p>
<p>I believe that when colleges and universities report how much they “raised” in a capital campaign, it includes pledges. Those numbers are pretty soft, and actual cash brought in by the end of the campaign may be a small fraction of what’s announced. Some alums may pledge X dollars per year for Y years, and the Y-year total is counted while only the first-year payment is collected. Others may pledge to make testamentary gifts which the school doesn’t collect until their deaths. Others may make current gifts of charitable remainders, allowing the donor to receive all the income from the asset for life, with the asset going to the school at the donor’s death; the donor gets a tax deduction for the present value of the remainder, and the school counts the present value of the remainder toward its endowment. So when Stanford “raises” $6.2 billion in a capital campaign, it doesn’t mean an immediate $6.2 billion cash infusion into its endowment. Far from it. Maybe a billion? They’ll eventually get most if not all of what’s pledged, and some of what they do collect will turn out to be more valuable than it looks today (and some, no doubt, less).</p>
<p>Thanx Bc-makes sense. </p>
<p>[Stanford</a> Joins Procession of Universities to Taxable Bond Market - Businessweek](<a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?)</p>
<p>A bit surprised that Yale hasn’t joined the others. Would have expected a pretty sizeable loan from them-atleast by July.</p>
<p>[News</a> & Press - Public Worker Pensions Find Riskier Funds Fail to Pay Off](<a href=“http://www.preqin.com/item/public-worker-pensions-find-riskier-funds-fail-to-pay-off/102/5003]News”>Preqin | Alternative Assets Data, Solutions and Insights)</p>
<p>Looks like the Yale model not working out too good for public pension funds. When will endowments admit the same?</p>
<p>Unspoken truth is that one of the biggest problems with alternatives-the big fat fees paid to the alternative funds-is what actually makes it difficult to move away from alternatives. Those fees- $1.35B in the case of PERS(pennsylvannia public pension)- drive political donations, jobs and benefits for all sorts of connected charachters( one well known PE investor invested in a bogus film deal to get access to the NY pension fund), and college campaign donations. No money to divy up if you invest in index funds.</p>
<p>[Budget</a> concerns underscore memo | Yale Daily News](<a href=“http://www.yaledailynews.com/news/2012/apr/02/faculty-memo-underscored-by-budget-concerns/]Budget”>http://www.yaledailynews.com/news/2012/apr/02/faculty-memo-underscored-by-budget-concerns/)</p>
<p>More than 3 years after the financial crises Yale is still struggling with budget issues.</p>
<p>[For</a> some prominent hedge funds, a strong first quarter | Reuters](<a href=“http://www.reuters.com/article/2012/04/04/us-hedgefunds-performance-idUSBRE8331FC20120404]For”>http://www.reuters.com/article/2012/04/04/us-hedgefunds-performance-idUSBRE8331FC20120404)</p>
<p>First quarter hedge funds doing Great! up 2.3%. Oops-S&P 500 index up over 12% in same time period. Getting harder and harder to explain why endowments invest so little in low cost index funds and so much in high cost, high risk hedge funds.</p>
<p><a href=“http://www.reuters.com/article/2012/04/04/us-falcone-lightsquared-idUSBRE83319U20120404?feedType=RSS&feedName=everything&virtualBrandChannel=11563[/url]”>http://www.reuters.com/article/2012/04/04/us-falcone-lightsquared-idUSBRE83319U20120404?feedType=RSS&feedName=everything&virtualBrandChannel=11563</a></p>
<p>One example of the crazy risks some of these hedge fund billionaires take. This guy 3 years ago had one of the 3 or 4 largest hedge funds in the world at $28Billion. Not alot of “hedging” going on with this guy</p>
<p>A lot of good links here…</p>
<p>Falcone…is he going to be sued? He is looking like a clown.</p>
<p>“We can’t verify the stats, and we suspect that measuring this stuff is pretty tough. But the general idea that the big money in hedge funds comes from running them, not investing in them, seems hard to argue with.”</p>
<p>I don’t know why investors have such a love affair with hedge funds.</p>
<p>Why would anybody lock in 4+% Interest rates for 100 years? If rates go up, the value of those bonds are going to crash.</p>
<p>^^^ It could be that pension fund managers just don’t care, especially those that are funded by third-parties with essentially bottomless pockets (e.g. the state), have captive participants who can’t (and don’t need) to switch to better managers, and are not themselves awarded by performance.</p>
<p>[The</a> Curse of the Yale Model - Forbes](<a href=“http://www.forbes.com/sites/rickferri/2012/04/16/the-curse-of-the-yale-model/]The”>The Curse of the Yale Model)</p>
<p>I’m not so sure the yale model has worked out as well as the author seems to think it has for Yale.</p>