Crunch time for the Harvard endowment:
The hunt is underway for a new CEO at the Harvard Management Company. And chairman Paul Finnegan and his board intend to get it right this time.
Counting interims, they've now had six CEOs at their shop since Jack Meyer departed in 2005, and mostly mediocre returns to show for it.
After Mr. Meyer's departure it took a one-year search to land Mohamed El-Erian, who then lasted less than two years before he moved to PIMCO. Now, Stephen Blyth has departed after just 18 months on the job.
It looks like this search will be briefer. Some sources say they may have someone aboard by September. But in any case the board needs to set a new course with a new leader.
Last month, before Mr. Blyth's resignation was announced, we looked at Harvard's performance (especially versus Yale), and suggested that it might be time for HMC to undertake a major re-think of its business. Maybe their vaunted "hybrid model" is no longer viable.
We did not expect to be revisiting the subject so soon, but events have overtaken us. So here we are again.
What's on the board's mind?
Mr. Finnegan, who became HMC chairman late last year, is a private equity investor and we note that Harvard also announced -- in an unusual year-ahead notice in May -- that David Rubenstein of PE giant Carlyle Group would be joining the Harvard Corporation board in 2017.
Add to this a statement from Mr. Finnegan on July 27 that HMC going forward would lean more on outside money managers "who have the resources, skill and experience."
Taken all together, this portends a shift -- or at least a tilt -- from HMC's "hybrid" structure to something closer to the Yale "purebred" model. And Yale, incidentally, has been cleaning Harvard's clock in private equity for years.
If internal management of public-market assets, which was Mr. Blyth's forte, is to be de-emphasized, then it would make sense to look at successful big-endowment CIOs who are already executing such a mostly-outsourced and alternatives-heavy model.
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