BANKRUPT BANKER
University with $4 billion in assets but only about 21% of them liquid investments could also be the victim of a surprising and catastrophic failure.
Monday, 1 December 2008
University with $4 billion in assets but only about 21% of them liquid investments could also be the victim of a surprising and catastrophic failure. Osbon decided not to name the university, but Thomas Jefferson's own University of Virginia fits the bill. Its assets have dropped 20% to $4 billion during this bear market and the school's trustees have invested heavily in illiquid private equity, real estate and alternative investments.Leonard W. Sandridge, the school's chief operating officer recently assured students and alumni that the endowment is sufficiently liquid for the school's needs. Those private equity investments are long term, after all.
But the private equity world is reeling just like everyone else. Cerberus Capital was meant to buy the remaining 20% of Chrysler from Daimler this year. Now the private equity firm is accusing Daimler of misleading it in 2007 when it sold 80% of Chrysler for more than $7 billion. Given the vast amount of due diligence Cerberus performed before buying most of Chrysler and putting Robert Nardelli in charge to clean it up, the Cerberus accusation is stunning and might portend bad news for private equity in general.Randy Carver, an adviser with Raymond James, believes that these are the mixed signals that are causing all of the market's short-term volatility, "I think we are going to vacillate between confident and fearful until we get into the first or second quarter next year."
