<p>Idad, I think this also happened with the Ivy endowments. They were all looking for cash and selling their common stock was one of their only avenues. Very little tier 1 common stock is left in any of the Ivy endowments.</p>
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</p>
<p>dstark and sm74:</p>
<p>As they say on the TV infomercials, “But wait! There’s more!”</p>
<p>In addition to losing 36% of the endowment value down to $336 miillion and carrying debt of $107 million or 32% of the endowment, Haverford also has cash call commitments of $140 million or another 42% of the endowment – by far the highest I’ve seen from a liberal arts college. And, if that isn’t bad enough, the $140 million of cash call commitments are payable over the next four fiscal years starting with this year.</p>
<p>So, you can easily see why they got spooked about liquidity. It’s kind of like all these schools claiming to have “decided” to issue taxable debt to meet payroll – like they had the luxury of sitting around and appointing a committee to ponder the issue (after the lights were shut off).</p>
<p>Haverford has been very quiet about their budget cuts, eeerily quiet, considering that they are in a real jam. They have $192 million of endowment assets that can be converted to liquid cash within 12 months, or about $48 million per year over the next four year before they are wiped out of cash. They have cash call commitments averaging $35 million a year over the next four years and they spent $25 million from the endowment last year for operating expenses above and beyond tuition revenues and so forth. Even without figuring debt service, that’s $60 million an a year in cash needs. So they have to whack $12 million a year just to get to the point where they can wipe out every penny of liquid assets over the next four years.</p>
<p>So, it’s not just Harvard and Yale that are facing challenges. Almost every school has its own cross to bear as they emerge from this market meltdown. I think there may be a lot of laying low until this year’s recruits have mailed their deposits May 1st.</p>
<p>According to the Moody’s bond info. Yale now has $7.6B in capital committments and around $5B in available liquidity, and Princeton has $5.5B in committments and $4B in liquidity. </p>
<p>In private equity things are really stacked in favor of the general partner. One example of that is that when a limited partner makes a committment they pay the 2%(in some cases the percentage can be negotiated down some) operating fee right away-even though the money hasn’t been invested. I guess the assumption is that the limited partner is funding the general partners cost of finding deals. Anyway, if Yale was paying the traditional 2% on their $7.6B in committments that would be a sizeable $150M/year. I can see why everyone wants to work in private equity.</p>
<p>Interesteddad, that’s good info. Haverford can use some major donations.</p>
<p>PE lost a lot of funding…the endowments blew up. Kind of circular.</p>
<p>[Harvard</a> endowment prospects | Harvard Magazine](<a href=“http://harvardmagazine.com/breaking-news/harvard-and-other-schools-endowment-prospects]Harvard”>http://harvardmagazine.com/breaking-news/harvard-and-other-schools-endowment-prospects)</p>
<p>Not alot of plain english here but I think what he is saying is that Harvard is going to look at assets more in terms of liquid and non-liquid in the future. Good example of making a simple thing sound as complex as possible.</p>
<p>[The</a> Morning Leverage: IPO Window Looks More Like Brick Wall - Private Equity Beat - WSJ](<a href=“http://blogs.wsj.com/privateequity/2010/02/11/the-morning-leverage-ipo-window-looks-more-like-brick-wall/]The”>http://blogs.wsj.com/privateequity/2010/02/11/the-morning-leverage-ipo-window-looks-more-like-brick-wall/)</p>
<p>The liquidity crises is directly tied to the inability of private equity companies to exit(sell) their investments with one of the most common being IPO’s. If it continues like it has at the beginning of 2010 look for alot more University borrowing.</p>
<p>In the private equity world, IPO means “sell to a bigger fool”, right? The whole bubble has just been one big institutional Wall Street ponzi scheme. They’ve run out of bigger fools.</p>
<p>It’s destroyed a lot of good companies in the process.</p>
<p>Would agree Idad, so many of these companies have been stripped of their valuable assets and laden with so much debt that an IPO is pretty problematic. Why buy one of these when you can buy a perfectly healthy and growing company cheaply. I think the best thing that could happen to a company is for a competitor to be bought by a PE company - one reason why I think the stock market is doing so well despite a poor economy.</p>
<p>[Financial</a> Reports, Financial Reporting: Office of the Controller](<a href=“Financial Management | It's Your Yale”>Financial Management | It's Your Yale)</p>
<p>Yale finally published their 2009 annual report. What is really interesesting with Yale is that right at the time that the market fell apart Yale was seriously ramping up its capital spending and endowment draw. Not good timing. They drew $1.2B from the endowment and with a value now at $16B that is a 7.5% rate. To get down to 5% that would equate to a $800M draw-$400M less. </p>
<p>The other thing that strikes me with all these Ivy financials is that despite saying that they are making cuts their budgets continue to increase 5-10%. I think this is because they are trying to avoid cuts that would suggest that they are impacting the academic standing of the school-therefore they cut free breakfasts, lower the thermostat, cut low paying jobs. Problem is those cuts don’t really amount to much. To make up sums like $400M its hard to avoid making meaty cuts.</p>
<p>Williams College ended need-blind admissions for internationals today, effective immediately with the current applicants. Not surprising. This was a hideously expensive initiative that seemed to have the effect of the same applicants hiding assets when applying for Williams versus applying full-fare to other schools where doing so would be advantageous.</p>
<p>Williams received an average of less than $5000 total revenue per international student. That’s hard to rationalize when you are getting $34,000 average revenue per US student and looking for millions of dollars of budget adjustments.</p>
<p>Didn’t Williams say they weren’t touching international aid when they cut the no-loan program? Do you think there was just too much backlash from alumni and current students that they felt pressured to make this move (even though it is the right move given the other cuts)?</p>
<p>I’m just saying… if this was their plan all along, why parse out the information?</p>
<p>I don’t know why Williams is doling out their budget cuts one morsel at a time.</p>
<p>I don’t know what led to the discussion of international aid. I mean, it was obvious to me that the budget numbers on that were totally unsustainable. You can’t sell your international seats for an average of $4,996 a year and justify making cuts anywhere else in financial aid or academic programs. You would be better off not having international students at that price. It’s just ridiculous in the 21st century where the US is hardly the home of all the wealthy people on earth. Let the admissions office do their job.</p>
<p>If I could see that, I assume that the bean counters at Williams could see it. I tried to make sure that my numbers got seen enough places to raise the transparency (and maybe a few eyebrows) a little bit.</p>
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<p>It will be interesting to see if the internationals attend anyway, in which case suggestions that many have been hiding assets would seem to be correct.</p>
<p>midmo:</p>
<p>There’s some kind of self-selection going on because other similarly selective LACs are able to enroll a mix of financial aid and full-pay internationals and do so without diluting the caliber of their student body.</p>
<p>I don’t fully understand the mechanism, but something about need-blind is resulting in Williams enrolling essentially zero full-pay internationals. The differences in average aid package are fairly minimal. It’s all in the mix. It’s just killer getting no full-pay internationals to enroll.</p>
<p>I just don’t believe that the internationals at Williams and Swarthmore are that different on a macro level. They come from the same schools: Daewoo, Raffles, the big English speaking international prep schools.</p>
<p>I think part of it is that there is an incentive for an affluent family with a top priority of getting a US acceptance to apply without asking for financial aid, except at the need blind schools where there is an incentive to minimize assets and apply for aid. The universe of internatinals who speak fluent English, complete IB programs, and score in the top percentiles on SATs, by all logic, must include some wealthy families.</p>
<p>The US dollar index has rallied from 72 to 80 as the Euro has taken a hit from the PIGS problems and the Dubai World problems from this past weekend hasn’t helped. That might put a bit of a crimp or generate a bit of worry for the affluent foreigners. On the other hand, China has been dumping Treasuries and it appears that China is going to revalue so we might pick up more affluent Chinese students.</p>
<p>[Harvard</a> Tests Market for Its Property Bets - WSJ.com](<a href=“http://online.wsj.com/article/SB20001424052748703798904575069861927920520.html?mod=WSJ_HomeAndGarden_sections_Commercial]Harvard”>http://online.wsj.com/article/SB20001424052748703798904575069861927920520.html?mod=WSJ_HomeAndGarden_sections_Commercial)</p>
<p>Harvard is back aggressively trying to sell their limited partnership interests. Based on what I know about some of the PE firms assets they are trying to sell I would say good luck getting much interest. The issues they have with many of their PE investments goes beyond poor performance and liquidity, they also bear a huge cash liability with capital call committments, they face continuing to pay 2% management fees on called and uncalled committments, and they are dealing with PE firms who have no interest in exiting their investments because if they did they would no longer get their 2% management fee(and many of these PE firms have no chance of raising new funds). </p>
<p>[Conversus</a> Capital: Conversus Capital Announces Block Trade and Change in Board of Directors](<a href=“http://www.conversus.com/article_display.cfm?article_id=1118&archiveyear=2010]Conversus”>http://www.conversus.com/article_display.cfm?article_id=1118&archiveyear=2010)</p>
<p>Harvard also raised $100M here. They sold at about $13 while Conversus reports a NAV of around $23- about a 40% cut to NAV.</p>
<p>i-dad:</p>
<p>Since Dartmouth is holding onto need-blind for internationals, could you run your spreadsheet to see if its numbers are similar to Williams’?</p>
<p>Here ya go, along with some need-blind and non-need-blind context. </p>
<p>Dartmouth splits the difference. They have 74% internationals receiving aid versus 93% at Williams and 57% at Swarthmore. Their average aid package to internationals on aid is the same as Swarthmore’s, $43k versus $48k at Williams. Average net revenue for internationals overall is $18,000 which isn’t bad. That’s about the same as Grinnell (not listed here). Swarthmore’s is $25,000 because they enroll more full-pay internationals. </p>
<p>Interestinging, Dartmouth has the highest average net revenue for US students of the schools listed, but those numbers are close across the board for the very top tier schools.</p>
<p>
**Swarthmore**</p>
<pre><code>7% % international students
</code></pre>
<p>57% % receiving aid (international)
53% % receiving aid (US)</p>
<p>25,184 Avg net revenue (international)
33,569 Avg net revenue (US)</p>
<p>**Amherst** </p>
<pre><code>8% % international students
</code></pre>
<p>89% % receiving aid (international)
54% % receiving aid (US)</p>
<p>6,255 Avg net revenue (international)
31,035 Avg net revenue (US)</p>
<p>**Williams** </p>
<pre><code>7% % international students
</code></pre>
<p>93% % receiving aid (international)
49% % receiving aid (US)</p>
<p>4,996 Avg net revenue (international)
33,852 Avg net revenue (US)</p>
<p>**Dartmouth**</p>
<pre><code>8% % international students
</code></pre>
<p>74% % receiving aid (international)
49% % receiving aid (US)</p>
<p>18,157 Avg net revenue (international)
35,882 Avg net revenue (US)
</p>
<p>[Cornell</a> Investment Chief to Leave After Drop in 2009 (Update1) - BusinessWeek](<a href=“Businessweek - Bloomberg”>Businessweek - Bloomberg)</p>
<p>One Ivy Investment Chief bites the dust. Tight operaiting budgets at some of the less wealthy Ivies are creating some tensions.</p>
<p>Now that there is so much less money to manage, the additional seven people he hired for the Cornell investment office should be able to pick up any slack.</p>