Shaw Capital Management Online-Blog

Japanese shares dropped for the first time in the span of three days while the French and German heads announced they will not increase a budget to help Europe’s debt crisis. Meanwhile, housing starts in US fell, renewing the concern that profits of exporters will be cut back as Shaw Capital management fears.

Sony Corporation, Japan’s largest exporter of consumer electronics, slumped 1.9% following talks in Paris yesterday between German Chancellor Angela Merkel and French President Nicolas Sarkozy. Meanwhile, the world’s biggest carmaker, Toyota Motor Corporation, dropped 1.4%. Japan’s top energy exploration company, Inpex Corporation, fell 2.3% due to reduced crude prices.

In Tokyo, the Nikkei 225 Stock Average dropped 0.8% to 9,039 as of 9:31 am. While the wider Topix index fell 0.5% to 774 with 3 shares losing for every 2 that climbs up.

An equities manager at SMBC Nikko Securities, Inc, Hiroichi Nishi, said that the meeting in Paris proved debt matters can’t be resolved in such a short time.

Futures on the Standard & Poor’s 500 Index fell 0.4% today. Yesterday, as the French and German leaders did not approved of selling euro bonds and increasing the 440-billion euro ($633 billion) rescue fund, the New York index dropped 1% to 1,1,92. Both leaders also proposed submitting another financial-transaction tax that was previously rejected in 2010.

European Union’s statistics office announced yesterday in Luxembourg that the 17-nation Euro area, Gross Domestic Product grew 0.2% in the second quarter compared to previous months when the economy increased 0.8%. In a Bloomberg News Survey, this has been the weakest expansion since the euro zone emerged from a downturn in late 2009 and was less than the 0.3% average estimate of 34 economists.

The Commerce Department detailed that housing starts in the US dropped 1.5% in July from June, and the alternative for future construction also suffered a setback, Shaw Capital management observed.

Nishi added, “The housing numbers of US were not really strong, which triggers a persistent delay in their economy.”

Exporters decreased following reports of economic development in Europe and the opposite happening in the US, which hurt the position for earnings abroad. Sony dropped 1.9% to 1,668 yen, Toyota fell 1.4% to 2,860 yen and Japan’s third biggest carmaker, Honda, lost 2.3% to 2,556 yen.

On the other hand, mining companies reduced prices of oil products. Inpex lost 2.3% to 514,000 yen. The second biggest oil driller, Japan Petroleum Exploration Company, fell 0.8% to 3,330 yen.

Yesterday, crude oil for September delivery decreased 1.4% to stay at 86.65 dollars per barrel in New York. Prices of 6 industrial metals, including aluminum and copper, fell 0.5% in the London Metal Exchange Index.

Shaw Capital Management Factoring: Online, Is Dream Date a Scam?

I worked up the nerve to write him and was thrilled when he replied, saying he was flattered to receive my email. He told me he is a great cook (perfect), loves the beach (ditto) and tries to work out but isn’t always consistent (Hello, soul mate!). He said he hoped to hear from me again soon.

Imagine my heartbreak when I discovered he doesn’t exist.

I know many people on dating websites tell little white lies—putting a positive spin on their age, weight, income or the reason their last relationship broke up. But I’ve been surprised to discover that some profiles are fakes, created by scammers looking to defraud individuals. In many cases they are able to take in sophisticated victims, people who would never fall for one of those emails from Nigeria telling you how to claim your inheritance.

Dan Picasso

Take Keith Samuels. After breaking up with his long-time girlfriend last year, the Washington, D.C.-based senior manager at an import-export company says he decided to try his chances on dating site eHarmony. Before long, he connected with a woman he says looked like a model. She said she was 28 and worked for a British travel company. “I was very flattered that a younger, attractive woman started paying me attention,” recalls Mr. Samuels, 45.

For two months, Mr. Samuels and the woman chatted on email and occasionally on the phone or Skype, discussing their families, jobs and interests. They never met in person. Then one day, she wrote and said her mother was very sick and she was trying to raise money to pay the hospital bill. She asked for $5,000. Mr. Samuels wired it to her. “I thought I was being the protector,” he says.

Almost immediately, the woman’s profile disappeared from the site. Mr. Samuels couldn’t reach her when he tried to write or call. “I was an idiot, and I got scammed,” he says. He didn’t hear from her again. EHarmony spokesman Paul Breton says the company tries to educate members about safety, and a full-time team reviews profiles using technology and their instincts.

How can smart people get fooled so easily? Psychologists blame what they call the “halo effect.” It’s what happens when we notice something we like about a person—often it’s physical beauty—and then start imagining other positive qualities. It’s the reason good-looking people often are paid more than average-looking people, and it happens all the time in online dating. We see an attractive person, or read an interesting profile, and soon we are projecting onto that person who we are looking for, letting our guard down, ignoring red flags. Online scammers love the halo effect.

The Federal Bureau of Investigation says it gets thousands of complaints a year from people who have been fleeced by people they met on dating sites. The online dating industry says scammers represent a small fraction of all profiles. “But scammers are aggressive,” says Mark Brooks, an industry consultant who has worked with Cupid and PlentyofFish.

A lawsuit filed in December seeking class-action status in U.S. District Court in Dallas alleges that more than half the profiles on Match.com are “inactive, fake or fraudulent.” Responding to questions about the lawsuit, Match.com president Mandy Ginsberg said the site has 1.9 million paid subscribers, fraud happens to very few of them and a full-time fraud-prevention team works to identify and block fake profiles.

At the FBI, one Cyber Division section chief, Tim Gallagher, says most scammers operate from abroad, especially West Africa and the former Soviet republics. In a typical scenario, the scammer creates a fake profile using photos of an attractive individual, in many cases lifted off social-networking sites. Often, the written part of the profile is copied verbatim from a real profile or a recycled template. Almost always, it is designed to tug at the heartstrings, the FBI says.

Scammers want to make an emotional connection. At first, they flatter and fawn. Once you are hooked, they hit you with some variation of several well-worn sob stories, Mr. Gallagher says. Sometimes they say they live abroad and desperately want to visit you, but their country’s banking system is broken. Or they’re at the airport and their credit card has been declined. Some scammers even pretend to be U.S. military service members trying to get back home and low on cash. Their stories all end in same place: Please wire money, and they will pay you back.

“They present themselves as being vulnerable, but they are really looking for someone who is more vulnerable,” Mr. Gallagher says.

Online-dating sites use three lines of defense against scammers. There’s technology: Typically, an automated system will track how many messages a profile sends per hour, or searches for words like “wire.” A security team may scan suspicious profiles. Most reputable sites encourage users to flag inappropriate behavior, including money requests.

Now, some online-dating sites are adding more exclusivity and security. At IvyDate.com and DateHarvardsq.com, which launched in the past year, a membership committee reviews every profile and photo submitted to check for grammar, spelling and other inconsistencies suggesting the works of an overseas scammer unfamiliar with English. “You have to create the right environment,” says Beri Meric, co-founder of the sites. “Just like in the off-line world, people are looking to go to the right neighborhood to meet the right people.”

Global Personals, the British owner of U.S. sites including Texasdating.com and Theseniordatingagency.com, says it has a person—not a computer—check every photo, profile and message. The company says it gets 8,000 new members a day of which about a dozen are scammers whose profiles it pulls down immediately. On Iloveyouraccent.com, members can opt to pay for a background check of anyone on the site.

Match.com, on its website, identifies some other common red flags: Proceed with caution with anyone who claims to be recently widowed or an American working overseas, or who quickly asks to communicate on an outside email or messaging system. In April, after it was named in a lawsuit filed in Los Angeles County Superior Court by a woman alleging she was sexually assaulted by a man she met through the site, Match.com said it will start checking existing and new members against a national sex offenders registry—a measure it says it has been evaluating for years. “While these checks may help in certain instances, they remain highly flawed, and it is critical that this effort does not provide a false sense of security to our members,” the company said in a statement.

And of course, screening for sex offenders won’t do much to weed out scammers. Where does that leave you?

Rule No. 1: Trust your gut. That’s what I did when bits of Mr. I-Love-to-Shop’s story weren’t adding up, such as this, from one of his emails: “I can’t stop starring at you and i don’t think any man with his right sense can stop too. You astonish.” And this: “I am a cleaning nut!! On my days off work I crank up the music, forget about everything else, and make my house smell and look prettyful.”

When I searched for him on the Internet, I found he wasn’t on Facebook. He wasn’t a licensed veterinarian in the city where he said he worked. I copied much of one of his long email messages into Google. Voilà! The entire email came up on several websites detailing “romance scams.” So much for Mr. Right. Delete.

Shaw Capital Management Factoring: IMF Hack A Warning For Others To Invest In Staff Training

Staff training about simple email threats may have helped the International Monetary Fund (IMF) in New York from being hacked by a targeted malware attack, according to one analyst.
According to Bloomberg, the hack’s perpetrators obtained a “large quantity of data,” including e-mail and other documents during the intrusion.
Ovum’s UK based IT security analyst, Graham Titterington, said in a statement that many security mistakes occur within banks and other financial institutions because staff have not received sufficient training on threats.
[ With the increasing threat of cyber crimes, protect yourself and stay informed on the latest news with Computerworld's Security newsletter ]
“People are people and have innate vulnerabilities with respect to trusting the wrong people, accepting inducements, or simply having more pressing concerns at the time they are approached [via email],” he said.
While there was “no magic bullet” to prevent a cyber attack, the IMF could have also put more security measures in place.
“Most information theft attacks are launched through an Internet facing application in the corporate gateway, attacking vulnerabilities in applications using relatively predictable strategies such as SQL injection or scripting attacks,” Titterington said.
“So improving the coding standards of applications is a major step, or alternatively protecting applications by screening them with an application layer firewall.” According to Titterington, access control to systems was another area where controls were frequently circumvented, as attackers steal the credentials of legitimate users through a number of types of attack.
“Spyware is often inserted into the target organisation well before the main attack takes place to acquire this information. Monitoring data movements, data encryption, and data loss prevention systems can also reduce the loss of information directly from electronic systems, particularly with regard to high volume theft,” he said.
In the case of the IMF, data monitoring did flag the data breach, but not soon enough to prevent the hack taking place. “However, security technologies themselves are not universal panaceas, even when the vulnerabilities have been dealt with,” said Titerington.
“Data loss prevention is cumbersome and can obstruct legitimate business if it is not perfectly tuned while encryption is only as good as key management and brings the risk of losing all access to your data if you lose the key.”
Got a security tip-off? Contact Hamish Barwick at hamish_barwick at idg.com.au

Shaw Capital Working Management Tips:Building on passion

There might be some truth to the stereotypical view of Indians being more emotional and passionate, at least as far as businesses are concerned. Discussing the “Indian way of entrepreneurship”, Rajiv Deep Bajaj, vice-chairman and managing director of Bajaj Capital, and communications chairman of the Delhi chapter of the US-based Entrepreneurs’ Organization (EO), says training entrepreneurs is essential in India. He believes that drawing from Western models won’t help much given the differences. EO is a global network of more than 7,500 business owners from 40-odd countries, which provides learning opportunities across countries and enables entrepreneurs to solve business challenges, learn in different ways, network locally or globally, and much more. Edited excerpts from a phone interview:

What do you mean by the Indian way of entrepreneurship? How would you say it compares with the West?

There is a difference. While our business objectives are the same, which is add value to society and create profit-making ventures in turn, our way of doing it is different because of our cultural differences from the world. The West is an “I” society, they are more individualistic. We are a “we” society; we live for the family; in rural India, we live for the community. Most entrepreneurial ventures in India are family run and not professionally run as in the West; in the West, they segregate ownership from management whereas here there’s a strong alignment between the two. Given the vast difference in both styles, our attitude and way of working is different and has to be different—if we simply copy Western entrepreneurial models, it simply won’t work.

How do the diverse backgrounds of entrepreneurs make them different? For instance, how would a first-generation entrepreneur be different from a fourth-generation one?

Your background plays a huge role in business: The mindset that you bring to your business is essentially a product of your background. If you are a first-generation entrepreneur, for instance, studies and general observation tell us that they will be more hands-on. On the other hand, a fourth-generation entrepreneur has been brought up in such an environment that he would be acclimatized to play a supporting role, and leave the day-to-day running to the professional staff.

Do you feel that India lacks training facilities for its entrepreneurs?

I absolutely agree. Our strength is also our weakness. The fact that we’re so high on emotions in our management is ultimately the reason we ignore processes. We do not go into details of understanding the process of management, and hence we make mistakes in our respective ventures. There are few platforms where entrepreneurs can learn from each other and share experience, and our organization, EO, attempts to change that.

Can anyone be groomed into becoming an entrepreneur, or do you need some inherent qualities?

You need the attitude of an entrepreneur, which is the mindset of risk; you need to understand the risk-reward equation, and that for high risk there is high reward. If you belong to a conservative school of thought, and are used to a fixed-return mode, then an entrepreneurial venture is perhaps not for you.

What is the kind of training EO can equip budding entrepreneurs with?

Training is essentially making someone aware of the issues an entrepreneur should be aware of while running a business, such as HR, tech, operations, processes, marketing, sales, areas that are part of any business. As an entrepreneur, another essential aspect—that they miss out on—is peer-to-peer learning, which is the real learning for entrepreneurs as opposed to classroom learning. They need to share their experiences because whether they have a Rs1 crore business or a Rs1,000 crore business, the generic management issues and challenges are the same.

Research shows that people learn best from experience sharing. The registration and application of that learning is much better. At EO, we provide such platforms for students. EO Delhi has 100 members, and this breaks up in sub-groups called forums, which then meet periodically and meet the informal board of directors to get feedback about their business. This board consists of experts in every field: HR, finance, marketing, and so on.

Shaw Capital Working Management Tips: For Delaware’s jobless, emotional capital can also take a hit

Beth Miller

6:00 PM, Mar. 5, 2011

Almost two years have passed since a human-resources worker came up to Gayle Larson while she was at work in a lab. Could they talk for a minute?

They walked to a conference room, where a few career advisers were waiting. Larson understood then what was happening. A colleague already had been laid off. And soon, she was cleaning out her desk as the woman from human resources stood by.

That tap on the shoulder in May 2009 ended Larson’s job with AET Films, formerly Hercules, where she had worked as a technical research associate for eight years. She was one of about 250 employees trimmed from AET’s payroll as it emerged from bankruptcy.

Larson, 57, has had plenty of company at the unemployment office, where she says she sometimes has waited up to seven hours and never less than two. And plenty of people are in her shoes across the country, too. She was among 14.8 million U.S. residents — 36,100 in Delaware — who were unemployed in 2010.

Now, she’s getting her house ready to sell. It was her parents’ home and she bought and renovated it after her mother died, but she needs to sell it now.

“Before, I always sat down on the first of the month and paid all my bills,” she said. “Now, I sometimes have to call people and say, ‘I can’t pay this week, but when I get my next check, I’ll be able to.’ ”

The stress of unemployment can be excruciating, experts say, making the loss of a job even tougher.

“We’ve got people choosing between car insurance, food, medicine — what do you choose?” said the Rev. Dale Brown, pastor of Union United Methodist Church in Bridgeville, who called for a community prayer meeting after Invista announced a few years ago that it would lay off hundreds at its Seaford plant. That meeting produced a network of church leaders and community volunteers who set up a Job Loss Response Team that for the past two years has offered workshops and other support for job seekers, who have shown up by the hundreds.

“It’s affecting people we used to think of as very stable, those who had really good jobs at one point.”

Shaw Capital Working Management Tips: Harvard’s Crimson Cubs With $43 Billion Dwarf Their Former Endowment Home

Call them the Crimson Cubs.

Adage Capital Management LP, Charlesbank Capital Partners LLC, Convexity Capital Management LP, Highfields Capital Management LP and Regiment Capital Advisors LLC are all Boston- based investment firms run by former endowment managers at Harvard University.

Since leaving the world’s richest school, in Cambridge,Massachusetts, they have climbed into the top ranks of hedge funds and private equity. Altogether the firms oversee more than $43 billion, exceeding Harvard’s $27.6 billion fund. All have beaten their investment benchmarks since inception.

The endowment brain drain began in 1998, triggered in part by the opportunity for its traders to run their own firms and make more money, even as alumni and faculty complained they were paid too much. In 2005, 14 months after seven members of the class of 1969 criticized compensation in a letter to then- President Lawrence Summers, endowment chief Jack Meyerquit, ending a 15-year run, to form Convexity. As financial markets plunged in 2008, Harvard’s investments lost a record 27 percent.

“Spinouts from Harvard Management like Charlesbank have become some of the highest-performing investment managers in the market,” said Lawrence Golub, a Harvard donor and the New York- based chairman of Golub Capital, which manages $4.5 billion in assets as a lender to buyout firms. “It’s an economic loss for Harvard but a windfall for all the partners who are building these great businesses and making way more than they would have within the four walls of Harvard Management.”

Lost Expertise

The departing managers took with them expertise they honed under Meyer, who built an internal trading team that included fixed-income specialists David Mittelman and Maurice Samuels, who joined him at Convexity. Tim Peterson, who started Regiment, managed high-yield bonds. Charlesbank founder Michael Eisenson led an in-house private-equity group at Harvard, while Jonathon Jacobson of Highfields managed equities. Phillip Gross and Robert Atchinson of Adage were equity analysts.

Highfields, started in October 1998, has gained an average of almost 13 percent a year, according to a person with knowledge of the firm. That compares with the 3.6 percent average return, including dividends, by the Standard & Poor’s 500 Index. Adage has outperformed the S&P 500 index by about 3 percentage points annually since the firm began trading in 2001, according to two people with knowledge of its performance.

The people asked not to be identified because the firms don’t make their returns public.

Meyer has outperformed a group of benchmarks based on market indexes by an annual average of 7.7 percentage points since he began trading in February 2006, according to a letter to investors obtained by Bloomberg News.

Crimson Cachet

“The class of ‘69 spent a lot of time arguing over tens of millions in compensation and ended up losing $10 billion,’’ said Steven Drobny, author of ‘‘The Invisible Hands: Hedge Funds Off the Record — Rethinking Real Money.’’

Officials at the funds run by former Harvard managers declined to comment or didn’t return phone calls seeking comment.

The cachet of Harvard — where crimson is the school color and the name of the daily newspaper and the sports teams — helped the former endowment managers recruit investors when they were on their own, said Lou Morrell, a former chief investment officer at Wake Forest University in Winston Salem, North Carolina, who invested with Meyer when he started Convexity with more than 30 endowment employees.

Seed Money

After Jacobson and Eisenson left in 1998, the university considered allowing Harvard Management Co., which oversees the endowment, to manage money for other institutions to minimize future defections. The university, which decided against the move, went on to invest with the managers in exchange for a break on fees. Convexity and Highfields received $500 million apiece, while Regiment got $300 million, according to a person familiar with the firms.

The allure of the Crimson Cubs is similar to that of the Tiger Cubs, a group of funds set up by former traders at Julian Robertson’s Tiger Management LLC or seeded by the billionaire. Robertson founded New York-based Tiger Management in 1990 and built it into one of the world’s largest hedge funds in the late 1990s before returning clients’ money in 2000.

At Harvard, Meyer transformed the investment portfolio from a conventional mix of stocks and bonds into a virtual hedge fund. He also pushed the endowment into hard-to-sell assets such as real estate, private equity and natural resources on the theory that the university could afford to lock up its money in long-term bets with the potential to exceed standard equity and fixed-income returns.

Class of 1969

Meyer, 65, more than quintupled Harvard’s fund to $25.9 billion when he left from $4.7 billion when he started in 1990. Gains averaged 16 percent a year in his final decade. Among the biggest U.S. endowments, that trailed only Yale University, in New Haven, Connecticut, andDuke University of Durham, North Carolina, which each returned 17 percent annually.

Harvard’s class of 1969 said in their November 2003 letter to Summers that the combined $107.5 million earned by the fund’s six top performers was excessive and the money would be better spent on scholarships.

‘‘What we said and continue to believe is that working for an educational institution, we didn’t think it was appropriate for them to be compensated at levels they were being compensated,” said Stanley Eleff, a lawyer in Tampa, Florida, who was part of the group of 1969 graduates who wrote to Summers. “We would never expect Harvard’s football coach to be paid like an NFL coach.”

‘Talented Investors’

Eleff said, “Whether Harvard Management would’ve done better or worse had some of these people remained, I’m not in a position to comment about.”

John Longbrake, a spokesman for the university, said he didn’t have information on fees paid to the former managers who are investing for the school.

“We are pleased that so many talented investors have been drawn to work at Harvard Management Co., and that our organizational model allows us to benefit from their expertise when they were employees and now as external managers,” he said in an e-mail.

In the year ended June 2003, Samuels, who managed non-U.S. fixed-income assets, earned $35.1 million, while Mittelman, who managed U.S. bonds, received $34.1 million. Meyer said when he resigned that scrutiny of Harvard Management’s compensation played a secondary role in his decision.

El-Erian’s Tenure

After a nine-month search, Harvard named Mohamed El-Erian, who oversaw emerging-markets investments at Pacific Investment Management Co., to succeed Meyer. El-Erian resigned after less than two years to return to Newport Beach, California-based Pimco, where he became co-chief executive officer and co-chief investment officer.

In the 12 months ended June 30, 2007, the first full year under El-Erian, Harvard gained 23 percent, compared with the 18 percent average for endowments of more than $1 billion. In his time, the percentage of money Harvard managers handled fell to about 30 percent from as much as 85 percent under Meyer, partly because of the exodus of internal managers.

El-Erian also started allocating money to hedge funds via Mark Taborsky, whom he hired fromStanford University to head investment with outside managers. Within a year, Taborsky’s team revamped Harvard’s group of managers, with some of those relationships forged in exchange for longer lockups of capital, El-Erian wrote in his 2008 book, “When Markets Collide.”

Lehman Crisis

Jane Mendillo was hired as Harvard Management’s CEO in July 2008. Her first year was marked by the collapse of financial markets in the wake of Lehman Brothers Holdings Inc.’s bankruptcy in September of that year.

As the endowment plunged, so did the value of the university’s interest rate swaps, pressuring Mendillo to liquidate investments to extricate the school from a cash squeeze. The university raised money by selling $2.5 billion in bonds in December 2008 and also froze pay for all faculty and nonunion employees that academic year.

After the record decline in the year ended June 2009, investments rose 11 percent in the past year, beating the school’s own benchmark while trailing the returns of a broad group of institutions.

Harvard’s former managers have thrived, except for Sowood Capital Management LP, started by Jeff Larson in 2004 with $500 million from the school. The $3 billion firm lost more than 50 percent as corporate bond and loan markets melted down in July 2007. Larson sold most of its assets to Citadel LLC, the Chicago-based investment firm run by Kenneth Griffin, and unwound its two funds. He spun out Denham Capital, a private- equity firm, before his fund started losing money.

Regiment Capital

The Crimson Cubs are based in the John Hancock Tower, the tallest building in New England, except for Regiment Capital, whose office is a block away.

Adage and Regiment were two of Harvard’s biggest external managers in 2008-2009, according to an internal document. Regiment was listed as one of Harvard’s largest independent contractors on a tax filing for the year ended June 2009, receiving $33.7 million in fees.

Regiment, which generally invests in below-investment grade assets, last year owned leveraged loans, options, credit-default swaps and other securities, according to an investor document.

The firm’s hedge fund gained 7.1 percent in 2010, less than the 14 percent increase of the Citigroup High Yield Index. The fund has returned more than 8 percent annually since its March 2000 inception, beating the gain of the Citigroup benchmark, according to a person familiar with the firm. The firm manages about $6 billion.

‘B or B+’

Highfields, which bets on falling and rising asset prices and invests in companies with large market capitalizations, gained almost 16 percent last year, compared with the 15 percent return by the S&P 500 index. The firm lost 18 percent in 2008, when the S&P 500 lost 37 percent in the worst crisis since the Great Depression, and rebounded 36 percent in 2009, more than the 26 percent increase of the benchmark. In 1998, his last year at Harvard Management, Jacobson earned $10.2 million, making him its highest-paid employee.

Harvard no longer invests with the hedge fund, according to a person familiar with the firm. In a January letter to investors, the firm said “from an investment perspective, I think we earned a B or B+ for 2010” and “in hindsight, we passed on some opportunities that we now wish we hadn’t.” Highfields managed $11.7 billion as of Dec. 31.

Adage, Charlesbank

The biggest Crimson Cub by assets is Adage, which is currently closed to new investors. The firm, with $13.5 billion in assets, gained 15.3 percent last year, compared with the 15.1 percent return by the S&P 500, according to two people familiar with the firm. The fund lost 38 percent in 2008 and regained 41 percent in 2009.

Charlesbank has raised seven private equity funds, starting the first three between 1991 and 1997 when the group was part of Harvard. The funds combined returned an average of more than 22 percent a year through September, according to a person with knowledge of its record.

The firm’s $590 million fifth fund, raised in 2000, was its best performer, returning about 22 percent, beating the 20 percent gain of funds in the top 25 percent as tracked by consulting firmCambridge Associates. Charlesbank’s poorest performing fund, its $985 million pool raised in 2005, has returned about 17 percent, more than the 9.6 percent increase of peers in the top 25 percent as tracked by Cambridge.

Convexity Outperforms

Meyer’s investment strategy fares best in choppy markets, he said in a January annual letter to clients. He told clients the firm beat benchmarks by 5 percentage points last year in a “mediocre” trading climate. The $12.3 billion fund beat its targets by 4.5 percentage points in 2008, before its biggest year in 2009, when it exceeded targets by 20 percentage points.

Harvard Management had an annual average gain of 4.7 percent over the past five years, compared with a 3 percent increase for its internal benchmark.

“The compensation protesters have accomplished none of their goals,” Golub said. “The people they were complaining about are making more money and Harvard’s endowment has less money.”

To contact the reporter on this story: Gillian Wee in New York at gwee3@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel atcbaumgaertel@bloomberg.net