Yes, University endowments, heavily reliant on alternative investments that have had the stuffing kicked out of them lately, have taken it on the chin. Still, don't worry about the University of Virginia. They have things totally under control. No, seriously. Their soothing Lehman Letters should wash all your worries away.
The open letter to the UVa community is the third issued by the University of Virginia Investment Management Co. in the last three weeks, but the first from company CEO Chris Brightman.
Brightman focused on the endowment's long-term pool over the last year and how in the last four months those investments have lost roughly $1 billion. That equates to roughly a 21 percent loss in the endowment pool's value from October 2007 to October 2008, Brightman wrote.
"To be sure, this is a startlingly large loss," Brightman wrote. "When put into appropriate context, however, it starts to seem less disturbing."
Brightman noted that while the endowment pool lost $1 billion recently, it grew $1.6 billion between June 2005 and June 2008, leaving the pool $600 million ahead, or at roughly $4.1 billion overall.
We have intensely enjoyed the various version of Lehman Letters that the crisis has been presenting us. Someone should put a "Dear Investor" collection up somewhere. Letters on a time-line set next to the net worth of the entity at the time could develop into a very entertaining exhibit at MOMA. Extra points if each instance of "sufficient liquidity" or derivation thereof is highlighted.
University endowment firm insists strategies sound [The Daily Progress]