Today's Post

    The Skorina Report: Fearless Forecast Says That Endowment Returns Will Disappoint in FY2015 Guest columnist Charles Skorina looks at the potential for 2016 endowment returns and finds them to be somewhat lacking... Could alternatives ride to the rescue?

    Can you feel it?  Can you feel the tension building as we await the official endowment returns for fiscal 2015? Probably not. But, in any case, we're here to assuage your anxiety with a fearless forecast, and it's not going to spread much joy across the campi. The typical full-year number for big endowments will probably be just 4 to 6 percent.  A few of the high-flyers may do a little better.  Some others will be lucky to see 3 percent. That means most endowments will fall short of their long-term target rate of return, which is a little north of 7 percent nominal. That's a big drop from last year's average 16.5 percent and even below the recent 10-year average of about 8.2 percent for endowments over $1 billion. Most schools won't publish an official annual return number for some weeks, but a few major endowments release quarter-by-quarter reports.  We can use them to project full-year results and get a feel for what happened in the year just past. We have hard numbers for the first ...

Featured Post

The Skorina Report: A Look at the New Investment Crew at NYU

Charles Skorina looks at the new crew at NYU.

New York University opened its doors in 1831 and it's now the biggest private college in the country by enrollment. But their $3.4 billion endowment is relatively small for a large private US university (it's only the 28th-largest) and its performance hasn't been very impressive. We've paid much more attention to their uptown rival, Columbia University, whose $9.2 billion endowment is bigger, higher-performing, and officially Ivy League.  We ranked Columbia and Yale tied for number one by 10-year performance in our annual ...

The Skorina Report: The Best, The Rest & Our Pick for Public Endowment CIO of Decade

Charles Skorina looks at the top public endowments and discusses performance with Erik Lundberg.

This month we are pleased to bring you our annual survey of endowment performance at the Public Ivys, including many of America’s biggest, most prestigious, and best-endowed public universities. We think the performance of these endowments ought to be of interest not only to the endowment and foundation community, but to the investment world at large.  They include some extremely talented people getting results which rival investment organizations anywhere. And, they are important clients for many for-profit money managers all over the ...

Guest Posts

The Skorina Report: Risky Business–Chief Investment Officers and Public Pension Plans
Guest columnist Charles Skorina with a cautionary tale of greed and deceit and less-than-best practices at a large public pension plan.

Happy August! This is supposed to be the slow season in the media biz as torpid reporters and readers doze through late summer, but a story in the Wall Street Journal last week caught our eye. The headline read: "Pennsylvania Attorney General Kathleen Kane Charged With Obstruction, Perjury." The story even got big play in London where the Daily Mail gave it a lot of ink with many pictures of Ms. Kane wearing a smart white-on-white outfit for her day in court. Just another ...

Risk management

Foundations: They’ve Taken a Blow from “Subdued” Markets

Both private and community foundations depend heavily on U.S. equities. Indeed, domestic equities remained the bright spot while other strategies underperformed in 2014. A new report from a collaboration of the Council on Foundations and Commonfund provides food for thought about the reversal in foundation returns in that year. The Study of Foundations by this collaboration, known as the CCSF, is three years old. Its third annual report is now available, and 244 private and community foundations participated. The participating private foundations (142) reported an average return of 6.1% for the 2014 ...

Legislation/Court rulings

Administration, via Verrelli, Rolls the Dice on Insider Trading Issue
Not all benefits are as tangible as a suitcase of cash, and the question of law for the Second Circuit, for the Ninth, and now perhaps for SCOTUS is: is friendship enough? how about regard for one's brother?

The Obama administration’s solicitor general, Donald Verrelli Jr., has asked the Supreme Court to review the Second Circuit’s decision in the Newman insider trading case. The appellate court decision, issued in December, instructed the district court to dismiss the government’s indictment against the two named defendants, Todd Newman (portfolio manager at Diamondback Capital Management) and Anthony Chiasson (portfolio manager at Level Global Investors). Both defendants were charged as having acted upon inside information they acquired as “tippees.” The rule of law is that there exists no generic duty amongst all participants in ...

Media Coverage of Hedge Funds

Cause and Effect: Or, Shooting the Messenger
Not even Schrodinger blamed the reporters for market irrationality. Saying out loud, "Hey, this cat is dead," doesn't kill the cat.

One of the oldest sorts of “media criticism” is the argument that reporting on something bad causes that bad thing. If only there were fewer news reports about violence … or embezzlement …or Ponzi schemes… it wouldn’t occur to anyone to act violently, embezzle money, or pay out earlier investors from the cash received from later investors. Put that baldly, such assertions seem absurd. It isn’t difficult, though, to dress such a notion up in sensible sounding, even scholarly, garb. In my own humble opinion, however dressed up, this notion that ...

Hedge Fund Industry Trends

CFTC Exempts ASX Clear from DCO Registration
The CFTC has issued its first exemption from the CDO registration mandate under 5b (h). The successful petition for that exemption, from ASX Clear, has the additional merit of having inspired an idiosyncratic seeming, but concise, comment letter, quoted in full here.

The Commodity Futures Trading Commission, on Aug. 19, exempted ASX Clear (Futures) from the obligation to register as a derivatives clearing organization with regard to swaps, “including, but not limited to, interest rate swaps denominated in U.S. dollars, Euros, Japanese yen, British pounds, Australian dollars, and New Zealand dollars.”  This concludes a process that inspired one commenter to quote hedge fund manager Paul Singer. ASX (Clear) is part of Australia’s ASX Group, a sizeable market operator created in 2006 when the Australian Stock Exchange merged with the Sydney Futures Exchange. The Commodity ...


The Enablers of the Fraudsters, Part I
A new lawsuit against the corporate and individual enablers of a securities fraudster moves forward. The former are "alleged" enablers, but the latter is a convicted fraudster, already serving his time. Faille seeks to draw lessons. Part One of Two.

I recently discussed with Attorney Wes Christian a lawsuit in Broward County against Signature Bank and related parties, one that alleges fraud, breach of fiduciary responsibility, conspiracy, etc. Christian is working these days for a group of plaintiffs suing Signature Bank N.A. and related entities, importantly including Barry Florescue and William Landberg. Landberg – the fellow portrayed above – was the principal of the fraud the plaintiffs allege. The others are charged with aiding, abetting, and conspiring ...


What Taper Tantrum?  And, Will Yellen Pull a Bernanke?
The head of the New York Fed said on Wednesday, August 26th, that "the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago." We may be about to see another Fed retreat, analogous to that of a little more than two years ago.

Convergence of developments in late August 2015 have forced me to think about the “Taper Tantrum” of 2013, whether we are seeing much the same thing again, and whether it will have much the same consequence – a pull-back in the declared intentions of the U.S. central bank. One of these developments, of course, has been the wild roller-coaster ride of equities in the U.S. and for that matter in the rest of the world, beginning ...

Risk management

An Overview of Real Asset Investing
Guest columnist Andrew Smith, CAIA, provides an overview of real assets and their commensurate risks and rewards.

By Andrew Smith, CAIA Institutional investors are significantly increasing their allocations to real assets.   What do they know that the broad investor pubic does not?    How are they utilizing real assets to protect the value of their portfolios in downturns and to increase growth in bull markets?   In this article, we answer these questions as well as discuss the numerous benefits, as well as the risks, of real asset investing. What are Real Assets? Real ...

Socially responsible investing

When Underfunded Pension Funds Take Up Social Responsibility Investing
In November 2014, Scott Stringer, New York City's Comptroller, launched a campaign he called the Boardroom Accountability Project. Bernard Sharfman makes a case that this BAP is a good example of much that is wrong with institutional/activist investing today.

A fascinating blog post by Bernard Sharfman takes a skeptical look at the activist investing of public pension funds, especially in the context of proxy access. Sharfman, a prominent corporate-governance theorist with the George Mason University School of Business, takes a laissez-faire view of the field of corporate governance considered as a whole. We’ll get back to that Big Picture point, but for now let us look at the detail work. Sharfman, in this posting for the ...