E Give To Harvard?

Give to Harvard, Give to Harvard,

With your blood and your sweat.

She needs more, millions more.

Give to Harvard, Give to Harvard,

With your blood and your sweat.

She needs all she can get.

I will attend a family gathering with at least 6 Harvard alumni over the holiday weekend, so we may discuss whether or not to donate to our Alma Mater. Harvard's overpaying its endowment managers is a reason not to give, according to members of the class of 1969 who are preparing for their 45th reunion. Some members of the class of 1969 published an open letter to Pres. Drew Gilpin Faust after they found that compensation by Harvard Mgm in salary, bonuses, and benefits had more than doubled in 3 years to $132.8 mn to FY 2013 (the last for which Harvard has reported). Bloomberg and the Boston Globe got a copy of the letter.

Harvard's expensive investment managers didn't invest very well. Its endowment gained all of 11.3% last year, despite the heavy spending. Meanwhile Yale gained 12.5%. Another Ivy League college, the U of PA, gained 14.4%. Harvard's total endowment closed the FY at $32.7 bn. To quote the alumni, staff salary and benefits were “increasing at a much faster rate than the endowment.”

Harvard is still trying to get back to its glory days before the global financial crisis when it had so much money at hand (nearly $37 bn) that in mid-2008 it planned a Crimea-style takeover of Allston, a town across the Charles River, now backburnered by Pres. Faust, if only temporarily after the endowment fell by $11 bn in the following year. About $1.25 bn was to unwind debt derivatives hit by lower interest rates, and another large sum for getting out of under-water real estate.

It replaced Mohammed El-Erian, an American, who had headed the Endowment for 2 years between two periods as a Pimco senior manager. El-Erian resigned to live in a more congenial California climate. Early this year he was ousted by Pimco's Bill Gross while remaining as a non-resident on the executive and advisory committees of its German parent, Allianz Versicherung. He now also writes a very good widely-syndicated column in The Financial Times.

As forecast, the mere hint of a weaker euro led to boosts in the price of the yellow metal and gold mining shares yesterday. 

*Paddy Power plc fell 3% in Irish trading today after a mixed unaudited H1 interim result was published. Its profits fell 14% y/o/y to euros 60.1 mn because of adverse sports results (meaning the football bets worked against the house more often than normal in Jan.-Mar., as already reported here.) EPS fell even more sharply, to 110.6 eurocents from 137.1 cent, down 19%. That's the bad bogside.

The good is that PDYPF upped its dividend by 11% to 50 eurocents and plans share buybacks, both harbingers of better times ahead. Its board expects a mid-teen percentage EPS growth for the full FY. This projection takes into account new taxes (in Britain and Australian states) and the exchange rate risk according to CEO Patrick Kennedy. It has euros 244 mn of cash on hand. In Q2 the punters lost 10.1% of the time, vs 9.1% in Q1, back to normal.

Mr. Kennedy noted that during the World Cup, Paddy commissioned Dr. Stephen Hawkings to work out the odds on England's winning, which produced coverage in every UK or Irish newspaper and went viral on Twitter and Facebook. PDYPF offered to refund losses for fans who bet on Britain (which duly lost) but this didn't reduce Q2 bettor loss levels from the expected 10.1, according to Mr. Kennedy.

Its H1 revenues rose 17% overall vs a mere 13% rise in the prior H1. The online active customer base grew by a quarter vs prior year's 11% rise to 1.792 mn punters while the new online base grew 35% vs prior year's 7% rise, to a total of 1.446 mn on-line customers. More than half its on-line clients now bet via cellphone (mobile phones in Irish) and 73% of its active bettors use their mobiles.

Its newest market, Italy, is growing fast and after the quarter ended its online market share hit 13%, making it the market leader there (with a small share of a small market for now.)

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Bankers Anonymous 7 years ago Contributor's comment
Picking nits here, but El-Erian is Egyptian, not American