Poor, poor Yale.
Since time immemorial the proud holder of the second-largest endowment among U.S. institutions of higher education, the Blue Mother last year plunged to the darkest depths of…third place.
Last month the University of Texas/Texas A&M Investment Management Co. (UTIMCO) announced that the joint endowment it manages for two schools — the University of Texas and Texas A&M University — surged to $30.9 billion, surpassing Yale’s $29.4 billion endowment for the 2018 fiscal year ended June 30.
Texas’ enviable investment performance was buoyed in large part by mineral rights from land it controls in the Permian Basin — a stretch of west Texas that has recently become the world’s fastest-growing oil-producing region due to innovations in hydraulic fracking.
“Yale and Texas’ endowments have been relatively close in size over the past decade, and though you cannot win every year, Yale’s Investments Office has done and continues to do phenomenal work,” Roger Ibbotson, a hedge-fund manager and Yale School of Management professor of finance, told the Yale Daily News. “In the long run, I would bet on Yale performing better than Texas, ultimately because Texas is likely to get only so much from oil.”
Indeed, the Texas system’s strong 2018 performance may be difficult to replicate in 2019, as the price of a barrel of oil has plunged by nearly 40 percent from a high of $76 last October, Ibbotson told the YDN.
UTIMCO generated an unprecedented $1 billion in royalties from its mineral rights in 2018. In 2017 and 2016, UTIMCO accrued just $700 million and $500 million, respectively, from the mineral rights.
According to Yale’s Investments Office FY 2017 financial report, 7.9 percent of Yale’s endowment is invested in natural resources including oil, gas, timberland, metal and mining. Yale owns an undisclosed number of shares in Exxon Mobil Corp. as well as a direct $78 million stake in Antero Resources, a natural gas producer that operates in the Appalachian Basin. However, the university does not disclose whether it owns mineral rights to any land.
As universities around the country continue to profit from their fossil fuel holdings, student activists at Yale have renewed their efforts to push the university to divest from the industry. Just last month, 48 students received citations for staging a sit-in in the lobby of Yale’s Investments Office demanding that the university completely divest from fossil fuels.
Yale’s fall from the No. 2 perch may be painful but it is not unprecedented: Over the last two decades, the Texas system’s endowment had edged out Yale’s twice before, in 2002 and 2014.
Oh, yes — the largest endowment among U.S. institutions of higher learning currently is $39.2 billion. It’s held by a school near Boston.
Contact Michael C. Bingham at mbingham@newhavenbiz.com
