Harvard Takes a Hit

Date: Thursday, August 2, 2007
Author: HFN Daily Report

Harvard University's endowment took a hit with the fall of once lofty hedge fund firm Sowood Capital.

According to reports, Harvard Management Co. lost about $350 million on its investments in Sowood. The Boston-based firm recently sent a letter to investors saying the subprime meltdown had reduced its assets to $1.5 billion. It has once been $3 billion strong.

Harvard has about $29 billion in its endowment, and the Sowood loss is the largest hit the endowment has taken in recent years. Sowood General Partner Jeffrey Larson used to work as a portfolio manager for Harvard.

The university's endowment has long embraced hedge funds, and alumni of Harvard Management have gone on to found such hedge fund shops as Adage Capital and Convexity Capital, which at the time was the largest hedge fund launch ever.