What’s Happening to the Harvard Men? Jack Meyer’s closing of Convexity closely follows the shuttering of another hedge fund founded by a so-called Crimson Cub. Stephen Taub July 19, 2019 Victor J. Blue/Bloomberg The closure of Jack Meyer’s Convexity Capital Management marks the third hedge fund founded by a Harvard Management Company alum to close down their hedge fund firm in less than a year — and adds to the list of hedge fund luminaries who have given up on the business. As Institutional Investor reported on Friday, Convexity informed investors that it is returning their capital, citing unfavorable market conditions. Convexity launched to great fanfare in 2005, given Meyer’s highly successful run as the chief executive of the Harvard Management Company. The endowment produced annualized returns of 16.1 percent during his tenure. But years of underwhelming performance took a toll on Convexity, with assets falling from $14 billion at the end of 2014 to $4.3 billion just two years later. As of year-end the firm had a tad less than $2 billion in regulatory assets, an inflated figure that includes leverage, according to a Securities and Exchange Commission filing. Meyer is not alone in the move. Last October Institutional Investor reported that Highfields Capital Management, headed by Jonathon Jacobson, told investors it is returning all of its capital and converting to a family office. [II Deep Dive: When a Harvard Pedigree Won’t Help You] Also that month, the Wall Street Journal reported that Frontlight Capital was planning to shut down. It was founded by Edward DeNoble, who previously worked at Convexity and HMC. Meyer and Jacobson join a slew of hedge fund luminaries who have closed their doors in recent years, including Leon Cooperman of Omega Advisors, John Griffin of Blue Ridge Capital, Richard Perry of Perry Corp., Eric Mindich of Eton Park Capital Management, and John Burbank of Passport Capital. Convexity’s closure is especially notable given its much-hyped launch. When Meyer, David Mittelman, and Maurice Samuels debuted their firm, they attracted $6.3 billion, making it the biggest hedge fund launch ever at the time. The firm’s woes go back to about 2012, according to an earlier interview with Meyer. Electronic Trading Just Keeps Getting Better[/paste:font] In July 2013 Institutional Investor reported that Convexity told clients it was closing to new investments until its performance improved, according to its second-quarter letter. Convexity explained in its annual Form ADV filing with the SEC that it invests in securities, commodities, and other financial instruments and products “with the goal of generating a return approximating the weighted average return of the Benchmarks” specified by its various investors. It uses “any combination of equity and debt securities, futures contracts, options, swap agreements, and other derivatives, commodities, cash equivalents and financial products, whether or not included in any Benchmark, in an effort to achieve a return comparable to that of the weighted average of the Benchmarks.” When Highfields announced it was shutting down, the long-short firm was managing $12 billion. It had compounded at 10.2 percent since its inception in 1998. But it posted low- to mid-single-digit gains each year from 2014 through 2017 and was down in the low single-digits in 2018 when it decided to close. “No one feels worse about our lagging performance than I do,” Jacobson stated in the letter announcing the closure and obtained by Institutional Investor at the time. Jacobson rose to prominence as senior equity portfolio manager for the Harvard Management Company from 1990 to 1998. He was joined later by Richard Grubman and Kenneth Coburn, both of whom retired before Highfields closure announcement. Little-known Frontlight managed about $280 million when it decided to shut down, according to the Wall Street Journal report. The Frontlight Enhanced Macro Master Fund I lost 5.6 percent in 2017 and was down another 4.17 percent in 2018 through September, according to the Journal, which cited a document it had reviewed. According to the report, DeNoble was a top trader at Convexity — which he had joined in the firm’s early days — who pushed to take a more macro approach to investing, something Meyer and his co-founders were uncomfortable with. DeNoble was a vice president and portfolio manager at Harvard Management Company, where he had spent more than 18 years
its not them, as stated in the article which is tru "unfavorable market conditions." hahahah nice guys therre at Harvard!
You can't suck out the capital to buy your yachts and ocean front mansions and leave much alpha in the till.
Yale more so, then Harvard, then Wharton. 3 completely overhyped institutions. The makers come from MIT, Carnegie Mellon and Stanford. The talkers from Yale, Harvard, and Wharton.
A self proclaimed "genius on ET" has suggested that Trump university is also a "maker" as they have two courses in its business masters program. One covers fibbonacci retracements and the other is entirely devoted to buying bottoms and selling tops. Pretty awesome if you ask me.
Chomsky left MIT for ASU 2 years ago! I know it's tough, but you do need to keep up with what's going on in the world if you're going to try to participate in adult conversations. Not to mention, wtf does Chomsky have to do with this conversation at all? Where is your degree from, by the way?
Everyone fell for the Bloomberg clickbait. This has nothing to do with Harvard as an institution. It has everything to do with a team that had done spectacularly well managing Harvard’s endowment and their flubs afterward. The author at Bloomberg put “Harvard” in the title to generate clicks. Managing an endowment is very different than managing a hedge fund. These guys had trouble making the transition.