|In this issue:
A post-season look at performance, pay, and pitfalls: the Ivys and Alt-Ivys
Omaha family office adds new CIO: Bryan Martin joins Spectrum Financial Services, Inc.
Skorina seeks a business-development pro for a growing outsourcer
From Academe: Yale Discovers The Ivy Allocation Arms Race
|Skorina announces hire of Bryan Martin by the Hamann family office:
I am very pleased to announce that Skorina & Co has assisted in the hire of Bryan Martin by the Hamann family office in Omaha, Nebraska. Mr. Martin became their new Director of Investments on November 26, 2012.
Mr. Martin was previously the Head of Opportunistic Investments and Real Assets at the New Jersey Division of Investments, which runs the assets of Jersey’s public pensions.
The Hamann family office, operating as Spectrum Financial Services, Inc., is headed by Daniel A. Hamann.
Spectrum’s substantial and diversified portfolio resembles a professionally-managed, mid-sized college endowment, including significant allocations to alternatives.
Mr. Hamann, with an extensive background in the financial services industry and an MBA from Wharton, is fully qualified to run the family money, but he also has a day job as CEO of a large insurance company. He decided it was time to beef up the family office with another professional. He needed an investment veteran experienced in all asset classes, but especially alternatives and private market assets. Mr. Martin is all of that, plus he has family ties to Omaha.
Mr. Martin is a young man with a thick resume. He earned a BS and MBA from the Kelley School of Business at Indiana University, class of 2004.
In the late 90s he worked with private equity firms in northern California before returning to Indiana for his MBA. From 2006 to 2010 he worked for both of Indiana’s public pension plans: Indiana PERF and Indiana STRS. By 2010 he held the rank of Director of Investments at STRS, the state teacher’s pension, running an $8 billion portfolio including hedge funds, real estate, real assets, and internally-managed public equities.
In 2010 Mr. Martin’s boss at STRS, chief investment officer Tim Walsh, was recruited to be the new CIO for New Jersey’s Division of Investments, which invests $68 billion for seven state pensions. A year later, Mr. Walsh reached back to Indianapolis and whisked Mr. Martin away to New Jersey.
At his new post in Trenton, Mr. Martin made some big moves. He was behind the creation of new strategic relationships with major private equity and real estate firms including Blackstone, TPG, and Och-Ziff. New Jersey was among the first big institutional investors to broker this kind of deal.
Deryl F. Hamann, father of Daniel Hamann, was a lawyer who acquired a very small bank in southern Iowa back in 1971. The little bank expanded to a 70-branch regional powerhouse, Great Western Bancorp, with Deryl Hamann as chairman and his son Daniel as president. In 2008, the family sold Great Western to National Australia Bank for a reported $798 million.
The elder Hamann was born in rural Iowa in 1932. He was the son of a tenant farmer, growing up in a farmhouse without electricity or indoor plumbing and attending a one-room country school. But he went on to study law at the University of Nebraska and has been recognized for decades as one of the country’s outstanding corporate attorneys.
The Hamann family today is a force in their hometown of Omaha, participating in that city’s revival through many civic, charitable, and professional organizations.
With Bryan Martin aboard, Mr. Hamann has one more reason to be confident that their resources will be secure to serve their descendants and community far into the future.
|Skorina’s seeking a business-development pro for a growing outsourcer:
My client is a West Coast-based firm providing asset allocation, manager research and risk-management services to corporate defined-benefit clients. They act as an outsourced CIO for nearly $10 billion in assets, and are looking to add more clients over the next few years.
That’s where you come in. They need a head of business development to build and maintain strong relationships with big-company CFOs and treasurers. You will be involved in all aspects of their marketing effort.
You will need an educational and professional background which makes you conversant with all aspects of the institutional investment process, including a solid understanding of the corporate pension world.
Specifically, we’re looking for at least ten years’ experience in a client-facing, business development role, perhaps as a consultant to institutional investors or with another CIO-outsourcer.
Travel will be involved, but re-location may not be necessary. If you want to join my client at their West Coast location, they’d be glad to have you. But, if you prefer to operate from another city, that would work, too.
If you’re interested, please respond by email to firstname.lastname@example.org.
Please put “business development search” in the subject line so that it gets my attention. Or just call me, and we’ll talk about it.
|The Ivys and Alt-Ivys: A post-season look at performance, pay, and pitfalls:
The Ivy League, strictly speaking, is just eight venerable colleges who play football against each other, mostly not very well.
But we’re only interested in the Ivys as investors, a game at which they’re world-class players. More specifically, we’re interested in the people who run the investment process.
We look at investment performance through the prism of executive search. How does the fund’s performance reflect the skills of the chief investment officer and his/her team? Has the institution hired the right people, and are they doing the right things?
Now, with laggard Cornell finally reporting early in November, we can offer a summary and analysis of how all the endowments performed in fiscal year 2012, ending June 30. For our purposes, a five-year performance window is about right to judge investors, so we’ll also consider their performance over the five years 2008-2012.
As we crunched the numbers it occurred to us that we could and should broaden out the field to include some of the other top private-school endowments. We added four which seemed to us to be roughly equivalent to the official Ivys in terms of prestige, academic standing, and endowment size. They are: Stanford, University of Chicago, MIT, and Duke. We hereby dub these four the Alt-Ivys.
So, taken together, we now have an even dozen. (Northwestern would have made the cut, but they inconveniently have a later fiscal year, and their results won’t be known until January.)
We haven’t forgotten about the public universities. We’ll have a rundown of their FY2012 performance in our next letter.
It would be tedious to poke into the workings of all twelve of these endowments. In any case, some of them reveal very little about what they’re up to. But we’ll stop to look at certain points of interest visible to the public.
The most obvious and unavoidable question is: what’s happening at mighty Harvard, whose recent performance draws attention in a not-good way?
We have, of course, no onus against the excellent people at Harvard Management Company. Like them, we are committed only to veritas.
To infinity, and beyond!
Theoreticians may say that an endowment has an infinite investment horizon. The schools certainly like to emphasize their 10- or 20-year returns (especially if recent performance is disappointing!).
That’s all very well, but whom do we hold responsible for 20-year performance? As Peter Drucker (or was it Spider-man?) used to say: with power comes responsibility.
Those who had their hand on the tiller back during the Clinton administration are mostly retired. But recent performance can generally be attributed to current incumbents. So, we’ll consider how these CIOs have been doing their jobs. And, of course, we’ll consider how they are compensated for their performance.
On to the stats!
Fiscal 2012: the winners and …non-winners:
First: the twelve endowments ranked by performance in FY2012, with some benchmarks for reference:
It’s just two miles from Harvard to MIT, but measured in investment return, a wide 8.05 percent gap separated first-place MIT from last-place Harvard in 2012.
The rivalry between the two schools may be asymmetrical (Harvard affects not to notice it), but MIT’s recent performance should gratify any Beavers in our readership.
This win may not quite eclipse that memorable day when aspiring MIT engineers allegedly used thermite to weld shut the gates of Harvard Yard, but an 8.0 percent return is still pretty good. So, we offer our congratulations to our friend Seth Alexander and his MIT investment crew.
We’re also pleased to see my own University of Chicago make a good second-place showing for the year with a 6.8 percent return. So, congratulations also to Mark Schmid and the Chicago investment office.
Does this mean they won’t be asking me for money this year? Probably not.
Big endowments had generally weak returns in 2012.
According to preliminary numbers from NACUBO-Commonfund, endowments over $1 billion earned an average of 1.2 percent for the fiscal year ending June. By comparison, a passive investment in a plain-vanilla domestic 60/40 portfolio, by our calculations, would have earned investors about 6.2 percent in FY2012. But only MIT and Chicago in our group beat the 60/40 portfolio.
Since both domestic stocks and bonds did pretty well, we presume that those low returns must be laid at the door of international and alternative allocations, which have become prominent in all the big endowments.
According to NACUBO-Commonfund, the average large endowment currently allocates a whopping 59 percent to alternatives, and only 10 percent to domestic equities. So a 5.4 percent rise in the U.S. stock market obviously didn’t help them much.
Now, what if we take a longer (and much fairer) 5-year perspective? Presumably those overseas and alternative investments paid off better over this longer stretch.
The Half-decade numbers: Alternatives strike back
Here, we see that, indeed, the alternatives seem to be earning their keep. In this period the S&P lost 2.5 percent and the 60/40 earned just 1.2 percent.
For 2008-2012, ten of the twelve beat the 60/40 benchmark. Harvard tied it, and Cornell missed it by 65 basis points.
Despite an off-year in 2012, when it returned “only” 2.3 percent (which is still slightly above median for this group), Columbia had built up such a head of investment steam in 2008-2011, that it still ranked first on a 5-year annualized basis. Its 4.9 percent return crushed the 60/40 by 367 basis points.
But look, there are Chicago and MIT again in second and third place, with 4.2 and 3.7 percent respectively, suggesting that their performance has been consistently good over this half-decade.
Harvard’s 5-year annualized return as of June, 2011 had risen to 5.5 percent (up from 4.7 percent as of June, 2010). But now, with a disappointing 2012 on the books, they’re back down to just 1.2 percent. So, it appears that their poor 5-year standing is due primarily to a bad 2012, when they were the only school in the pack who posted a negative return (albeit just barely).
So, Harvard, alas, now rides near the bottom on a 5-year basis, saved from an ignominious last-place finish only by Cornell’s 0.5 percent return.
Next, let’s name some names and consider the role of the CIOs.
Naming the names:
Eight of the twelve schools have had the same CIO (or president of their investment company) for all five years. In two cases – Chicago and Harvard – the incumbent has been there for at least three of the five fiscal years: Mark Schmid arrived at Chicago (from the Boeing pension) in August, 2009, and Jane Mendillo came to Harvard Management Company (from Wellesley College) in July, 2008. Also, recall that Ms. Mendillo had a previous five-year stint at HMC as a senior staffer under then-CIO Jack Meyer.
So, we’re going to put these two on the hook for their respective funds’ recent performance. Mr. Schmid should be pleased by that; Ms. Mendillo perhaps not so much.
In two cases – Cornell and Dartmouth – the CIO as of June, 2012 was a newcomer: A. J. Edwards at Cornell, and Pamela Peedin at Dartmouth. It would be unfair to saddle them with their funds’ five-year performance, and we won’t.
Dartmouth sits right in the middle of the pack with a 2.2 percent five-year return, essentially tied with Stanford and Duke. Even though they had no designated CIO for a year and half between the departure of David Russ in June, 2009 and the arrival of Ms. Peedin (from Boston University) in February, 2010; they seem to have performed quite well.
The too-many-CIOs theory:
In the case of Cornell, it’s hard to resist attributing some of their less-than-great performance to their having had three CIOs in the period. That includes the strange appearance and disappearance in Ithaca of Michael Abbot, who lasted just six months. I’m not privy to all that went on there (although I’ve got a pretty good idea); but, to someone like me who’s been involved in a lot a hiring decisions, the selection of Mr. Abbot had all the earmarks of a classically-bad hire.
Having no background as an endowment CIO certainly should not have been a deal-breaker in hiring Mr. Abbott; some outstanding endowment investors have come from other places. But that fact should have spurred the board to ensure that there was a meeting of the minds on just what his duties would be. In this case there clearly was not.
Allocation vs. execution:
There’s at least one datum supporting the too-many-CIOs theory for Cornell’s poor performance. On the quarterly endowment report for June, 2012, we see that their policy portfolio (which they call the Strategic Investment Policy) earned an annualized 2.2 percent for five years. But their actual return, of course, was just 0.5 percent.
It’s conventional wisdom in portfolio management that a lot of good (or bad) performance is the result of asset allocation. Cornell’s planned allocation should have given them returns right at the median among this group of twelve. They came in last because they missed their own policy benchmark by 170 basis points. The allocation performed pretty well. The execution fell short.
The CIO generally has significant input into the allocation plan, although this varies from school to school. But tracking that policy portfolio, by timely rebalancing and good manager selection/monitoring, is the core of a CIO’s duties.
The recent promotion from within of Mr. Edwards from interim to full-bore CIO looks promising for Cornell. He is, by all accounts, both able and well-respected by his colleagues. We shall see.
Now, let’s ask the allocation-vs.-execution question about Harvard. Their policy portfolio return for 2008-2012 was about 0.80 percent. But their actual five-year return was about 1.2 percent. So, their execution and/or manager selection was fine; good enough to beat their own model by about forty basis points.
If Harvard’s five-year return was anemic, it seems to be attributable mainly to their allocation rather than their execution. It’s the inverse of Cornell.
Of course, Ms. Mendillo also sits ex-officio on the 13-member HMC board, and has a strong voice in overall strategy and allocation. There’s every reason to think that she was in basic agreement with the policy portfolio.
Harvard’s 1.2 percent five-year return was less than the 1.4 percent average for all large U.S. endowments (per NACUBO-Commonfund for schools over $1 billion). And it was only about the same as our passive 60/40 portfolio. Historically, they have done far better than those modest benchmarks. That’s why the ladies and gentlemen at HMC have traditionally justified richer compensation than most of their peers.
Those treacherous foreigners:
So where, exactly, did Harvard fall down versus its peers in 2012?
The low granularity of data about private endowment allocations and returns makes it hard to pinpoint. And Harvard is more transparent than most.
But, our best guess is that it was those treacherous foreigners.
Harvard earned 3.2 percent this year on its large and growing real assets investments (about which, more below). They also made 2.5 percent on private equity, 7.9 percent on fixed income, and even eked out 0.8 percent on absolute return. So what went wrong?
Public equities was the only major segment which lost money for HMC in 2012. The 6.7 loss still beat the benchmark return, which was minus 9.1 percent, but it looks like the driver which pushed the overall return into the red.
We already noted that the S&P returned positive 5.4 percent in the period, and Harvard’s U.S. stocks handily beat that, with a positive 9.7 percent return, mostly delivered (we presume) by their internal platform people.
The problem was the two-thirds of their public equity which was devoted to foreign and emerging markets. Those overseas stocks totaled 24 percent of the entire endowment, and they tanked badly in fiscal 2012. Harvard lost 10.8 percent on foreign equity and 17.4 percent in emerging markets. The emerging markets loss was even a 150 basis points miss against HMC’s own benchmark.
This stung Harvard disproportionately because that 24 percent exposure to foreign and emerging equities is significantly higher than the average among large endowments. Per NACUBO, the average allocation to “international” equities among big endowments was just 16 percent in FY2011, the latest available.
MIT, for instance, at the top of our rankings for the year, was only about $1.6 billion long in foreign equities as of June. (That includes a $76 million short position, which couldn’t have hurt in that market.) So they had about a 12.5 percent exposure to those treacherous foreigners vs. 24 percent for Harvard. Big difference.
Columbia had a total exposure of about 20 percent to “global equities” – much smaller than Harvard’s 36 percent. The always-discreet Columbians don’t break out foreign vs. domestic, but it seems unlikely that they had more than 10 or 15 percent in the overseas bucket.
And, at Chicago, Mark Schmid’s team had about 15.8 percent in equities (labeled as “primarily international”), again significantly below Harvard.
Over the past five years, among this pack of twelve, Harvard has finished first, last, eighth, sixth, and now last again. But, Harvard’s long-term performance is still good.
If 2012 was, indeed, just a bad bounce, it’s quite likely that they will rise in both the 1-year and five-year rankings in 2013.
Pay vs. performance:
As executive searchers we also have a vulgar and insatiable curiosity about peoples’ salaries. The latest compensation data for these CIOs, based on IRS filings, is for the calendar year ending December, 2010. Not quite up to date, but it’s the best available.
Note that we have broken out the bonuses from other components. Incentive pay for these CIOs is typically about half of their total comp, although this varies from school to school. And, of course, it’s the piece we would expect to have some relationship to performance.
We can infer that the bonuses are (probably) based on performance in the period 2008 to 2010, although the specific formulas are confidential.
Although the pay does not exactly align with the five-year period 2008-2012, it should still give us a rough idea of who makes more and who makes less.
Here’s a chart including all the players and their 2010 comps. The two blameless rookies are in bold red.
We can see that the manager with the highest return in this 5-year window – Nirmal Narvekar at Columbia – also had the highest total comp in 2010, and that seems appropriate. As we’ve noted before, Mr. Narvekar and his team have been producing outstanding results for their school for quite a while.
But the second-highest total CIO comp in 2010 went to Ms. Mendillo, whose returns, as discussed above, have been lackluster relative to her peer group in 2008-2012.
We should also pause to note that Ms. Mendillo is not the highest-paid employee at HMC; not even close. And this is unusual. It’s the only case we know of where subordinate officers pulled down more than the CIO or president of the investment company.
Andrew G. Wiltshire, billed as Managing Director and Head of Alternative Assets, pulled down $5.6 million in 2010, versus Ms. Mendillo’s $3.6 million. Almost all of his comp — $4.99 million — was incentive pay.
As far as we know, Mr. Wiltshire is currently the best-paid endowment employee in the country, and probably in the world.
Stephen Blyth, HMC’s Managing Director for Public Markets, made $4.5 million, of which $2.2 million was a bonus.
Of course, these numbers are paltry compared to some HMC paychecks of yesteryear. Back in 2003, two of Harvard’s star bond traders each made over $30 million. But they departed in 2005, along with CIO Jack Meyer and many others. They made a ton of money for Harvard, but their bonuses were so conspicuous that Harvard caved to political pressure and capped salaries.
Mr. Wiltshire and Mr. Blyth are also sometimes referred to as heads of External Platform and Internal Platform, respectively; roles they were assigned in an organizational revamp announced in 2010. So, all HMC investment managers are now direct reports to either Mr. Inside or Mr. Outside, who in turn report to Ms. Mendillo.
Looking at all twelve schools, we see no obvious alignment between 2010 bonuses and 2008-2012 returns, whether we consider them as absolute dollar amounts, or look at them as a percentage of base salary.
Neal Triplett at Duke, for instance, got incentive pay of $1.2 million in 2010. That’s 286 percent of his base, the highest percentage among this group. But Duke’s return of 2.2 percent was just about at the median among the twelve endowments. It’s a respectable number, but still behind Columbia, Chicago, MIT, and Princeton.
We can’t coax out any consistent correspondence between pay and performance for this group, in this period. Other factors, such as the size of the endowment, the longevity of the CIO, and just how effectively he or she negotiated their original contract are undoubtedly in the mix.
Sharpening the analysis:
Another cut on this little dataset might give us a better picture: we can calculate the standard deviations of returns in 2008-2012, then generate Sharpe numbers.
Ex-post standard deviations are conventionally treated as a measure of portfolio risk. If any of these managers produced exceptionally high returns relative to risk, then they should jump to the top in a ranking by Sharpe number.
After all that crunching, we see that the rankings aren’t very different.
Mr. Narvekar at Columbia produced the highest absolute 5-year return: about 4.9 percent. And he did it with the third-lowest volatility among his peers: just 15.4 percent standard deviation. That gave him a nice Sharpe number, but he was already ranked number one and couldn’t go any higher.
MIT and Chicago are, again, close behind. And we note that MIT had the lowest volatility in the group.
And the re-ranking doesn’t benefit Harvard, either. They had the 11th-highest absolute return and the 10th-highest volatility. On a risk-adjusted basis they’re still sitting in 11th place among the twelve.
These aren’t self-reported numbers, by the way, except for annual returns. We did our own calculations from publicly-available data. The endowments have access to more precise internal data, but we think our numbers are at least approximately correct. No doubt we’ll hear about it if we’re wrong.
What we can say is that endowments with Sharpe numbers very close to zero — Brown, Harvard, and Cornell — would, by definition, have gotten just about the same returns with T-bills in this five-year period, on a risk-adjusted basis.
Brand management, and a voyage to Brasilia:
It’s clear that Harvard had a small public-relations problem this fall. HMC management must have known by late summer that they were going to report a weak number.
Harvard is a brand and a brand has to be managed. Any PR pro will tell you that it’s imperative to get ahead of bad news, and Harvard did so.
Ms. Mendillo made herself available to Bloomberg reporters for a rare, in-depth interview published September 18, in which she talked up their investment program in real assets, especially in timberland, and the reporters suggested that it would be the key to improving Harvard’s performance ranking.
Bloomberg’s take was that Ms. Mendillo was going to return Harvard to the top of the performance charts by capping private equity and other U.S. alternatives while buying timberland in places like Brazil, New Zealand, and Romania. Timberland was already 10 percent of her portfolio, and she was shopping for more. They even noted that she had personally flown all the way into the Brazilian interior to inspect some of her holdings.
Years ago, in her previous run at Harvard under Jack Meyer, she had spearheaded a successful move into U.S. timberland investments, which paid off handsomely. So we know it’s a strategy she already liked.
The natural resources bucket at Harvard (which appears to be mostly timber) has earned about 10 percent annually over the past ten years, slightly better than the 9.5 percent 10-year number for the whole endowment.
There’s a good story to tell about timberland as a long-term investment, and Ms. Mendillo tells it convincingly.
It takes a long time to produce incremental increases in timber production, while global demand looks to increase dramatically, and she claims that there are still pricing inefficiencies in the market.
Most importantly, she thinks she has world-class in-house talent who can find the good deals.
Remember Mr. Wiltshire, referenced above as HMC’s highest-paid employee? While he superintends all the alternatives, his real specialty is timber. He has a degree in Forestry from Canterbury University in New Zealand, and worked for a while in the N.Z. Forestry Service before taking several top jobs in real-asset management. And, he has still more arboreal experts working for him in his shop high up in Boston’s Fed building.
Mr. Wiltshire came to Harvard from Jeremy Grantham’s GMO group. HMC has also acquired Mr. Grantham’s son, Oliver Grantham, another timber maven.
The elder Grantham, a long-time timber advocate, has pointed out that timber has risen steadily in price for 200 years and has returned an average of 6.5% a year over the past century. Grantham calculates that stumpage prices – the value of all the wood on the stump – have beaten inflation by 3 percentage points a year over the past century. That last bit is particularly comforting to institutional investors who must, above all, maintain purchasing power. Through booms and busts, trees just keep growing. And, unlike peaches and corn, they don’t have to be harvested in any given year if prices are low.
The argument for natural resources as a long-term winner is very plausible. But it hasn’t always panned out.
Does anybody remember Daniel K. Ludwig? Back in 1982, Forbes listed him as the richest man in America, and he was regarded as one of the world’s most far-sighted investors. In 1967 he bought 4 million acres in Brazil, planning to use it mainly for tree-farming. He figured that the long-term demand for paper would be huge. And trees, like everything else, grow way faster in the tropics than in the temperate zones. Faster growth equals faster return on investment.
But his venture concluded like a tragic Joseph Conrad tale.
He spent at least $1 billion back when that was real money, and he lost most of it. Mr. Ludwig was a very shrewd and determined man, but the Amazon — the combined effects of soil, insects, humidity and tropical disease — defeated him.
Ms. Mendillo and Mr. Wiltshire may be smarter than Mr. Ludwig, who may have been right too early, as sometimes happens in investing. And, besides, Mr. Ludwig was farming trees for pulp, not hardwood, as Harvard seems to be doing.
There’s also the Green factor, which Mr. Ludwig didn’t have to grapple with. Harvard’s constituents mostly love Green, and what could be Greener than trees?
Timberland investments sound agreeable to many in the Ivy League. And, Ms. Mendillo’s Green credentials are good. Her husband (Ralph Earle III: Deerfield ’75, Harvard College ’79, Yale SOM ’84) coincidentally, is a highly-networked Green guru. He runs a company that advises on so-called green investing, and was an assistant Massachusetts secretary of environmental affairs.
On the other hand, as big investors buy up more and more land in the third world, the activists are getting restive. As Bloomberg reported, environmentalists and development experts have ramped up criticism of large institutional investors buying huge tracts of land in poor regions of the world.
Just last month, protestors at Harvard were demanding that the endowment bail out of all fossil-fuel investments. It’s always something. And sometimes the protestors get their way. Just ask Jack Meyer.
The socially-conscious folks may not turn out to be as formidable as the ravenous Amazonian insects which thwarted Daniel Ludwig, but every investment has its pitfalls.
We wait with interest to see if real assets really will put Harvard back at the top of its League.
|From Academe: Yale Discovers The Ivy Allocation Arms Race
While we’re talking Ivys, we’d like to alert you to a paper by two professors at Yale which offers a new perspective on how the big endowments decide to invest. Maybe it isn’t all explained by modern portfolio theory, after all.
In September, Sharon Oster and William Goetzmann of the Yale School of Management presented their paper “Competition Among University Endowments” at a National Bureau of Economic Research conference. NBER is the elite think-tank which, among other things, officially decides when recessions start and end.
They’ve explained the big shift into alternatives as a product of institutional competition: it’s an arms race to stay on top of the pecking order with first dibs on the best students.
They claim that their data show that when one school makes an investment decision — such as the decision to switch to another school’s investment model — its peers tend to follow suit for fear of losing their position in the hierarchy.
If herding behavior is driving allocations harder than actual returns, it seems to imply that late arrivals will find the herd has stripped those lush grasslands clean. So the leaders have to keep finding new pastures, like Brazilian forests.
It’s a lot more complicated than that of course, or we could have written it. But it’s quite lucid and includes some neat charts.
The paper itself is here:
(Note: this is a free version on the Yale website, dated June. We assume it’s substantially the same as the one published by NBER in September.)
If you want just a short take, reporter Sophie Gould gives a summary at the Yale Daily News.