Adage Capital Management; Charlesbank Capital Partners; Convexity Capital Management; Highfields Capital Management; Regiment Capital Advisors. That crew of Boston-based investment firms all have something in common, besides the fact they’re managed by former endowment managers at Harvard and are (bar one) housed in the John Hancock Tower.
The commonality? They’re all doing spectacularly, according to Bloomberg.
The “Crimson Cubs” since their departure from Harvard, “have climbed into the top ranks of hedge funds and private equity” and collectively manage more than $43 billion.
Meet the Cubs here >
And they’ve have all eclipsed their investment benchmarks since inception.
“Spinouts from Harvard Management like Charlesbank have become some of the highest-performing investment managers in the market,” said Harvard donor and hedge fund manager Lawrence Golub. “It’s an economic loss for Harvard but a windfall for all the partners who are building these great businesses and making way more than they would have within the four walls of Harvard Management.”
And according to a hedge fund CIO and one of the cub’s investors,
The cachet of Harvard… helped the former endowment managers recruit investors when they were on their own. “The allure of the Crimson Cubs is similar to that of the Tiger Cubs, a group of funds set up by former traders at Julian Robertson’s Tiger Management LLC or seeded by the billionaire.”
Harvard seeded three of the firms: Convexity and Highfields both got $500 million each; Regiment was given $300 million. Convexity is run by former endowment chief, Jack Meyer.
Under Myers, the value of the university’s endowment quintupled to $25.9 billion (when he started in 1990, total assets were $4.7 billion) as he turned the “investment portfolio from a conventional mix of stocks and bonds into a virtual hedge fund,” according to Bloomberg.
Founders: Phillip Gross and Robert Atchinson
Role at Harvard Endowment: Equity analysts
Returns: Last year it gained 15.3%. Adage is currently closed to new investors and by AUM, is the biggest Crimson Cub.
Founder: Jonathon Jacobson
Role at Harvard Endowment: Managed equities.
Returns: Fund gained almost 16% last year, betting on falling and rising asset prices and investing in companies with large market capitalizations, according to Bloomberg. (Jacobsen, to date, is the Endowment's highest-paid employee)
Founder: Michael Eisenson
Role at Harvard Endowment: Ran an in-house private-equity group
Returns: 'Charlesbank has raised seven private equity funds... The funds combined returned an average of more than 22% a year through September,' according to Bloomberg.
Founders: Tim Peterson
Role at Harvard Endowment: Managed high-yield bonds.
Returns: The firm's hedge fund gained 7.1% in 2010, and has returned more than 8% annually since its launch in 2000, investing in below-investment grade assets according to Bloomberg.
Founders: Jeff Larson
Role at Harvard Endowment: Investment manager.
Returns: The firm lost more than 50% of its value when corporate bond and loan markets imploded in 2007, forcing Larson to unwind two of his funds, not before selling off most assets to Citadel.