Harvard University last month decided to all-but-stop managing money in house and to lay off more than 100 of its endowment employees, because those employees had proven strikingly poor at managing money in house. Instead, Harvard’s going to make like Yale and pay hedge fund managers to do it.
Some of those Harvard money managers with pink slips in hand—namely, the good ones—did the math.
Portfolio managers Michele Toscani and Graig Fantuzzi, who each focus on fixed income at Harvard Management Co., are teaming up to start a hedge fund, according to people with knowledge of the matter. Sanjiv Bhatia, a portfolio manager who focuses on emerging market stocks at the $37.5 billion fund, is also setting up his own shop, said one of the people, who asked not to be named because the information is private….
Toscani’s and Fantuzzi’s firm will likely be named TPRV, said one of the people. One of Harvard’s internal strategies is called Tufnell Park Relative Value, which was one of the best-performing books in its hedge fund portfolio and among the largest in terms of assets in 2014, according to the McKinsey report.
Past performance, of course, is no guarantee of future outcomes, evidence for which one need only look at previous Harvard Management Company alums’ hedge-fund careers. Sometimes, things go very well, indeed. Sometimes, they go so well you just want to throw your keys in a valet’s face. Other times, they go less well. And still other times, they go spectacularly badly. Luckily for Messrs. Toscani, Fantuzzi and Bhatia, Harvard’s got $8 billion burning a hole in its pocket and doesn’t yet know where they’ll fall on the Adage-Sowood scale.