This is a big story on the front of Monday’s New York Times Business Section by Andrew Ross Sorkin:
Stanford University is selling stakes in funds run by the biggest names in private equity at deeply discounted prices.
While no one will confirm the names aloud, they are of the caliber of Henry R. Kravis, Stephen A. Schwarzman and Leon D. Black.
During the boom times, Stanford Management, joined other endowments in a rush to plow increasingly large percentages of their funds into private equity, real estate and other illiquid investments — committing some $12.6 billion of the university’s endowment.
But then the market soured, and Stanford’s endowment lost $4.6 billion in value in its last fiscal year, a decline of 27 percent. So it now seems to be suffering from investor’s remorse.
Its plan to sell part of its stakes in private equity firms — a bid to raise $1 billion or more — appears to be an attempt to cut losses on current investments and a way to get out of committing more money to future deals.
- “Investment Indigestion At Stanford”, Andrew Ross Sorkin, The New York Times, October 6, B1
It appears that the Swensen Model for endowment investing has been discredited. Another fallen former hero.