Word: putnams
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Dates: during 1970-1979
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...give the Corporation a means to judge HMC's performance, and so HMC itself could take advantage of the know-how of larger outside firms. Only three of those five firms still handle any Harvard money, though; one merged, and another wasn't doing the job right, according to Putnam. Today HMC uses outside talent mostly in specialized areas--for example, in its decision to commit money in venture capital (loans from an investor to a new business in hopes of a high return). "We didn't want to do it in-house, so we went out and gave...
...works within broad guidelines set by the Corporation, but there's almost no Corporation interference in HMC's day-to-day decisions. Putnam gives the Corporation a list of HMC's transactions every week. "I try to be able to answer questions, but there are very few questions," he says. If HMC's performance began to decline, he adds, the Corporation would not try to interfere in specific investment choices. "We would rather make personnel changes, switch some people around," he says...
...When you hire a manager you have to stick with him. If you meddle too much, you won't know whether the results are yours or his," Putnam says...
...reason Harvard can attract the kind of huge gifts it is counting on during its five-year, $250 million Harvard Campaign is its "good aura of investment management," Putnam says. "Alumni will only give when they think their money will be managed well--people will set up trust funds for Yale," putting a gift in a private manager's hands and sending Yale the interest, he says. But he adds that Yale's "aura" is worse than it deserves...
...market strategy through the 1960s, when other investors were taking ever-larger risks, and today--though it remains prudent compared to most private investors--Harvard is buying more stocks. "We think stocks got over-valued from 1950 to 1972, and now there's a pendulum swing the other way," Putnam says. "We're taking this as a long-term opportunity to get some damn good stocks cheap," Cabot says...