Former HMC Chief Returns to Teaching Role

Six months after resigning as the CEO of Harvard Management Company, Stephen Blyth has returned to teaching a statistics course in the Faculty of Arts and Sciences.

Blyth, who stepped down from the helm of the University’s underperforming investment arm in late July after taking medical leave, will teach Statistics 123: “Applied Quantitative Finance” this semester. He said the course will feature material drawn from his 22 years of experience in the finance.

“The material of the course was really motivated by my experience in finance, and so almost by default uses examples from my career, probably from earlier in my career,” Blyth said. “The material is compelling and elegant.”

Blyth said that he left HMC to undergo cancer treatment and that the disease is “very susceptible to chemotherapy.”

“Fortunately it is very treatable. I’ve lost my hair, but not my appetite,” he said. “I’m dealing with it, but being back in the classroom is a good focus.”

According to Blyth, about 130 students have indicated interest in enrolling in his course, which met for the first time Tuesday afternoon. The course will begin with an introduction to basic finance vocabulary, and then explore the “fundamental theorem of asset pricing,” according to Blyth. Statistics 110: “Introduction to Probability” is a prerequisite.

Blyth said he was unsure whether he will return to work at HMC.

Columbia’s former investment chief N.P Narvekar succeeded Blyth as the CEO of HMC in 2016, taking the reins of the company amid internal turmoil. In fiscal year 2016, Harvard posted its worst endowment returns since the financial crisis in 2009, returning negative 2 percent.

Blyth said the company is in “excellent hands” with Narvekar, who experts and financial analysts say could will restructure Harvard’s idiosyncratic investment model. Under its“hybrid” investment model, HMC retains an in-house staff and also hires outside firms to invest University funds. Most university endowments rely on outside funds.

The endowment’s value fell almost $2 billion in 2016, dropping from $37.6 billion to $35.7 billion. Several financial flows beyond Harvard’s poor investment returns affected the drop in endowment value, including the $1.7 billion distributed to fund over a third of Harvard’s annual budget in 2016.

The endowment’s performance is not the only challenge facing HMC: over the past few years, the company has faced significant internal turnover in its executive positions. Narvekar is the fourth HMC chief in the past decade. Jane L. Mendillo, who ran the company before Blyth, departed six years after inheriting the endowment at the offset of the financial crisis, and the company’s chief before her, Mohamed A. El-Erian, remained in his post for only a year and a half.

In comparison, HMC saw just one transition of leadership in its first 31 years of existence, and the Yale Investments Office has had the same chief executive since the Reagan administration.

—Staff writer Brandon J. Dixon can be reached at brandon.dixon@thecrimson.com. Follow him on Twitter @BrandonJoDixon.