Kiwi Cows and California Wines

By

Kiwi Cows and California Wines

The Independent examines Harvard’s investment history

By EVELYN GRAY

 

As Harvard students, we often find ourselves asking why the richest university in the world seems to spend so little on the things that we care about. The answer is complicated, but the reality is that the majority of the Harvard endowment is tied up in long-term investments, of which the historically strong returns are a large part of the reason that the endowment is so large.

Harvard’s $39.2 billion endowment is the largest of any University in the world and is equivalent to the GDP of a small country (almost the same as Cameroon or Tunisia). It is managed largely by the Harvard Management Co., which is known for its unique and ambitious investment strategy. In recent years, the returns on Harvard’s investments have not been as high as those of other Universities and thus Harvard has taken steps to restructure its portfolio through selling and acquiring some interesting and seemingly strange resources. A theme in this change seems to emphasize a move away from an investment in natural resources that had previously been a signature asset, but also resulted in controversy in Harvard Square and beyond. Below, the Indy has captured five of the more fascinating business ventures of Harvard:

  1. Brazilian Rainforest

In early 2018, the Harvard Management Co. announced that it would be exiting its foray into Brazilian agriculture, previously a hallmark of its sustainable investment portfolio. Bloomberg reports that Harvard had invested at least $150 million into the venture, with much of the funds going to an agricultural development in Brazil’s struggling Northeastern region. The farm was predicted to allow for larger returns with the production and sale of agricultural products like tomato paste and sugar, as well as ethanol and fuel from the byproducts. In the decision to exit this sustainable growth strategy, Harvard cited that their strong returns came with “significant challenges”. What Harvard meant by “significant challenges” is unclear.

  1. Vineyards in California

Fortune has reported that Harvard recently bought thousands of acres in vineyards in Northern California’s wine country.  With this purchase of the land, Harvard also gains the rights to the groundwater below — an increasingly valuable resource in a region plagued with draught for nearly 10 years. Harvard’s purchase of the vineyards and their respective water rights has not gone unnoticed, with some local politicians raising concerns about Harvard’s plans for the water.

  1. Warehouses

According to Bloomberg, Harvard unloaded nearly $950 million worth of warehouses in a sale to Blackstone Capital Group last September; the sale involved over 100 properties around the American Southeast. Urban warehouses such as these have increased in value recently with the growth in e-commerce, as companies such as Amazon need space to store items near cities so that they can provide the rapid delivery services that customers have come to expect.

  1. Uruguayan Timberland

Back in 2017, Harvard again made headlines when it sold over $170 million of timberland in Uruguay. The Street reports that this move was made as a part of an effort to restructure the entire shape of the endowment portfolio in its move away from natural resources. The Uruguayan timberland included almost 50,000 acres of wood-pulp producing eucalyptus trees.

  1. Kiwi Dairy Cows

The New Zealand Herald reports that Harvard sold a 5,500-head dairy farm in the summer of 2018, valued at over $105 million. They had reportedly bought the Big Sky Dairy Farm, among the largest in the region, for around $32 million in 2010. The farm had reported losses in the two years leading up to the sale. Dairy farms were not the only natural resources gamble that the Harvard Management co. took in New Zealand, however, as they also previously owned hundreds of thousands of hectares of timberland on the central island.

~~~

Though only containing a few examples, this list offers an interesting insight into the Harvard Management Co. and its work to preserve and expand the Harvard endowment. And while many Harvard students, including myself, struggle to understand why Sunday Sundaes are only offered once a week because, “It’s not like Harvard doesn’t have the money,” maybe it is because the dairy cows just aren’t producing like they used to. But I hope, if we are lucky, that — with Harvard’s newly acquired vineyards — good California wines and daily fresh berries will be added to the HUDS menu very soon.

 

Evelyn Gray ‘21 ([email protected]) is on the lookout for a sugar daddy to buy her a few million acres of far-away farmland.