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University CIO To Start Own Hedge Fund

The headline says it all. We previously noted that Cornell's CIO, James Walsh, would be leaving back in February. BusinessWeek now reports:

James Walsh, the departing endowment chief at Cornell University, plans to start a $150 million hedge fund with performance fees that are spread out over three years.

The fund, named Cayuga Capital Partners for Cayuga Lake near Walsh's home in Ithaca, New York, will invest in easy-to- sell securities such as stocks and bonds globally, he said in a telephone interview. Walsh, who is English, will base the fund in London.

He ran Cornellís endowment as it lost 26 percent in fiscal 2009, in line with declines at Harvard University and Yale University, the two wealthiest U.S. colleges. Cornell said Feb. 17 the fundís investments had risen 10 percent this year.

Interesting to note that BusinessWeek reports (presumably straight off of Walsh's press release) that Cornell experienced a decline in its endowment in line with that of Harvard and Yale under Walsh's leadership.

Of course, what they fail to note is that Cornell's endowment underperformed relative to the higher educational endowments as a whole last year. While Cornell was down 26.4 percent in FY 2009, the largest 42 endowments were down an average of 22 percent, and some of Cornell's peers, like Vanderbilt, Penn, and NYU, were all down less than 20 percent.

It's also curious that Walsh would name the fund after Cayuga Lake, a body of water that I imagine most people in England wouldn't be familiar with. Waslh, after all, is relocating back to his native England. It would be the equivalent of somebody in America naming their business after the Malverns in Western England.

Still, we give Walsh credit for adopting a more investor-friendly fee model, and we wish him the best of luck in merry England.

Matthew Nagowski | Posted on May 13, 2010 (#)

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