Word: hmc
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Dates: during 1970-1979
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University and financial leaders say this compactness has allowed Harvard Management to hold on to the talented investment managers who have given the company such a successful record so far. James N. Bailey, managing director of Cambridge Associates--which evaluates the investment performance of Harvard and other universities--says HMC has consistently beaten the market average by 10 to 25 per cent...
...think you can consider one stock without understanding the industry involved, the national economy, and the world economy," Cabot says. Each HMC partner covers the field or market he knows the most about, and keeps the others up to date at the daily meetings...
...HMC is only six years old. Until 1974, State Street Research and Management did Harvard's investing. The University treasurer at the time, George F. Bennett '33, was also president of State Street. "With the uprisings of the '60s, some felt there was something incestuous about the Harvard treasurer using his own firm to manage Harvard's endowment," Putnam says. Furthermore, since the treasurer both managed Harvard's investments and reported to the Corporation on how those investments were faring, he couldn't distance himself enough to judge the quality of the management. "The treasurer was in the situation...
...University has also found it cheaper to run Harvard Management than to pay outside managers, Putnam adds. This year's HMC annual report says its salaries are "comparable with other first-line institutions," but goes on to say the cost of running the company is one-third of the average in the field...
...HMC attracted and held onto an above-average group of investment specialists because it gave them a chance to spend all their time making specific decisions on which account, Harvard's $1.4 billion endowment. They don't spend much time on internal administration because the company is so small, and they don't spend any time on attracting more business or customers because the Corporation won't permit it. "They get to spend 90 or more per cent of their time on the fun part of it," Putnam says. In other investment firms, "as you move up in this field...