Ryan was critical to his plan. He had spent almost two decades in equity sales at Goldman before leaving in 2008 to run global securities at Credit Suisse. After less than a year, he left to co-found JAI Capital Management, a stock-focused hedge fund that was wound down after two years. He later ran another investment firm, MDR Capital Management.
Ryan brought in Howard, who had run a proprietary trading group at Goldman Sachs before decamping with his team in 2010 to KKR & Co. His group didn’t fare as well there. The private equity firm liquidated Howard’s $510 million fund in 2014, after it attracted fewer than 20 outside clients and its returns were dwarfed by the stock market, according to people familiar with the matter.
Hiring Spree
With new leadership in place, HMC hired at least nine analysts and portfolio managers, many of them with experience in so-called event-driven, long/short equity trading, according to information compiled by Bloomberg. A number had degrees from Ivy League or other top schools and came from hedge funds or other money managers. Howard oversaw a team of four people while the rest reported directly to Ryan, according to people familiar with the matter.
The timing for launching such as a strategy was not ideal. Actively-managed stock funds were struggling to distinguish themselves against market indexes. More hedge funds closed last year than opened, the first time since the financial panic in 2008, according to Hedge Fund Research.
While a number of the new portfolio managers struggled and were shut down, they were told by management that they would be free to trade again when the fiscal year began in July, according to two people familiar with the matter. Instead, eight were told in May their positions were being eliminated, cutting the new public equities team in half, the people said.
Two weeks later, Harvard President Drew Faust visited HMC to announce that Blyth had taken medical leave. Bob Ettl, the chief operating officer, stepped in. In June four more positions were eliminated as Harvard finished pulling the plug on the hedge fund strategy.
On Wednesday, the university announced Blyth was resigning, saying he would serve as a senior adviser to the HMC board and return to teaching. The CEO position would be filled by September, a person familiar with the matter said.
Some inside Harvard Management now wonder if more jobs will be on the line.
“Harvard essentially has permanent capital, so it’s unusual to see them shut down something of that size in such a short amount of time,” said Brad Balter, CEO of Balter Liquid Alternatives, which invests in hedge funds. “Clearly, it did not go as planned.”