HMC Portfolio Grows in Value

The venture capital segment of Harvard Management Company's (HMC) private placement portfolio increased in value by $175 million in fiscal 1992, HMC President Jack R. Meyer said last night.

In an interview in yesterday's Crimson; Meyer reported losses of $60 million in the portfolio's real estate and energy commodities holdings, but did not disclose the venture capital write-ups.

Due to a reporting error, The Crimson reported the losses as $65 million instead of $60 million.

While the numbers released yesterday do not invalidate Meyer's earlier statements, they mean that the portfolio's overall value increased by $115 million in fiscal 1992.

Also yesterday, Meyer disclosed for the first time that HMC's private placement portfolio--known as the Aeneas Group--was worth $1.251 billion at the close of fiscal 1992. That figure is up from $1.184 billion as of June 30, 1991, he said.

Meyer had declined to reveal the value of the Aeneas portfolio in the earlier interview. The HMC president has also repeatedly declined to identify Aeneas's investments, saying that it would put the company at a competitive disadvantage.

According to critics of HMC, higher valuations mean little unless HMC is actually able to sell its investments at a profit.

"The valuation of the private placement portfolio is highly subjective," said Albert F. Gordon, Jr. '59, a longtime benefactor of the University. "Since there is no current market price for these investments, and a valuation depends on best estimates, these best estimates can vary greatly, as so many investors have learned the hard wayin recent years."

Gordon said HMC should turn to outside analystsfor a more meaningful assessment of its position.

"HMC should present a `fairness opinion' signedby a reputable as well as generally acceptableinvestment banking firm for an evaluation to haveany validity," he said.

Over the past five years, Aeneas's compoundrate of return has averaged 2.8 percent. Lastyear, write-downs of $195 million on the portfoliocontributed to an overall return of just 1.1percent for HMC.

This year, HMC earned an 11.8 percent return onHarvard's $5.1 billion endowment

Gordon said HMC should turn to outside analystsfor a more meaningful assessment of its position.

"HMC should present a `fairness opinion' signedby a reputable as well as generally acceptableinvestment banking firm for an evaluation to haveany validity," he said.

Over the past five years, Aeneas's compoundrate of return has averaged 2.8 percent. Lastyear, write-downs of $195 million on the portfoliocontributed to an overall return of just 1.1percent for HMC.

This year, HMC earned an 11.8 percent return onHarvard's $5.1 billion endowment