Saturday, 31 January 2015
Last updated 18 hours ago
Dec 8 2005 | 5:06pm ET
Yale University’s $15 billion endowment is well-known for its strong performance and its use of hedge funds as investment vehicles, but now it is attracting unwanted attention for some of its investment choices. Last week, students and teachers at the Ivy League school held a rally protesting the endowment’s investment in a hedge fund which has a large stake in Corrections Corporation of America, the largest private prison company in the country.
According to a report prepared by the Graduate Employees & Students Organization (GESO) at Yale, a group which is not officially recognized by the university, recent federal tax forms show that Yale owns an 88% stake in the Farallon Capital Institutional Partners II fund, which is managed by Farallon Capital Management.
As of May 2005, the asset management firm held 47,000 shares of Corrections Corp. The report estimates that Yale’s investment in the prison operator is approximately $1.5 million.
“There are important reasons that democratic societies have historically delegated corrections to the public sector and not the private—this is one of the functions that really defines who we are as a people,” said Matthew Jacobson, a history professor at Yale who attended the Dec. 1 rally. “Privatization in this area is an assault on the very concept of the commonwealth. An institution like Yale ought to be probing and debating such policies, not banking on them.”
Tom Conroy, deputy director of Yale’s Office of Public Affairs, said that the university’s Advisory Committee on Investor Responsibility (ACIR), which includes faculty members and students, looked at the investment and decided against recommending that the university divest.
“There aren’t too many investments that some individual somewhere doesn’t object to,” said Conroy. “Yale is an institution that has pioneered ethical investing through Nobel Prize winner James Tobin and others, and simply because someone has an objection to an investment that is not the test as to whether or not you divest.”
Since the rally, members of the ACIR have met with members of GESO, the group that organized the rally. Sarah Haley, a graduate student teacher and co-author of the divestment report, said, “We had a meeting with the committee on investor responsibility [on Tuesday], and we will be granted a public hearing at their next open meeting in March.”
Farallon Capital Management declined to comment on the university’s investments with the firm.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…