(01-28-2014 10:31 PM)banker Wrote: I really don't understand the need for a $4.8B endowment, just like I don't understand why Apple is hoarding $147B in cash. In Apple's case, that money either needs to be used to grown the company through acquisition or distributed to shareholders down to a reasonable level. In the case of a university that money needs to be put to work to either further their mission or to provide a greatly reduced cost of attendance.
Given Rice's history, perhaps a large investment in fully paid minority scholarships.
you would make an outstanding financial adviser for Vince Young or any other pro sports athlete or lotto winner that wishes to be broke and in debt in short order
Rice has an operating budget of 556 million for 2014
they have 6,600 students and tuition (full price) is about 38K a year
so 6,600 X 38,000 = 250,800,000 so Rice needs to come up with another 250 million to meet their operating budget for the year
endowments (and private investments unless you are a pro sports player or lotto winner) generally pay out about 4.5% to 5% of the total amount of the endowment and that rate of payment allows the endowment to stay whole AND grow with the rate of inflation
so if you have $1,000,000 in the bank you can spend $45,000 to $50,000 per year and over the long term (10-30 years) you should still have an amount of money in your investments that equals $1,000,000 in PRESENT TIME dollars and that pays out an amount that in FUTURE INFLATED DOLLARS pays out an amount equal to $50,000 or so
because only a buffoon (or pro sports player or lotto winner) would live on say $150,000 per year spending into their investments and then one day wake up 10 years down the road and they have an investment portfolio that is only paying out money that amounts to $25,000 per year......even worse when you have the big house, the fancy cars, the babies momma payments and on and on that equal up to or surpass $25,000 per year and even more so when your playing career is ending and you can barely read and write and have no job skills to make up for your annual income that is ending
so with an endowment of $4.8 billion Rice has $240,000,000 to spend each year on their operations
add in 100 million or so in yearly sponsored research and you get to their annual budget numbers
also a LARGE part of that $240,000,000 goes to pay for tuition for athletes, academic superstars, and students with financial need.....so Rice is using that endowment money for "good" by giving scholarships and financial support for graduate student research, post docs ect.
as for "investing it" in something else......like what a $50,000,000 super computer.....well that is all fine and good but spending into the corpus of your endowment for something like that is like an idiot pro sports player or lotto winner immediately buying $1,000,000 worth of cars for cash before they have made even a single investment
because just like those cars a super computer will over time decrease in overall power relative to other super computers that come on the market in the future and just like those cars super computers require people to run them, maintain them, power and on and on
so if you just spend $50,000,000 right out of the body of your endowment in a few years you wake up like a pro sports star with an "investment" that is not worth what it once was, requires upkeep and someone to do that upkeep (and run it in the case of a computer) and you decide you want to move up to the newer faster model, but alas you have spent all of your money and you have no revenue coming in to actually pay for your upgrades
Rice could spend $200,000,000 on buildings, labs, spectrometers and on and on tomorrow, but just like a big fancy house and fancy cars all those buildings, machines and labs are now an EXPENSE and if you spend out of the body of your endowment you now have LESS money invested giving you LESS of a yearly return and in return you have MORE expenses yearly on lab staff, equipment operation, utilities and building maintenance
so you have done double the damage by lowering your investment portfolio and the annual returns from it while increasing your annual expenses.....and if you go through a period of investments like 2008-2011 when your investments (even extremely safe ones) decline in value and annual return and you do have to dip into your investments than you have really done yourself damage with your "let the good times roll" spending
this is why cities especially in liberal areas are always broke.....because when times are good and tax revenues are up they spend spend spend on new libraries, turd polish, parks, stupid "help" programs (that never work), employee pay and benefits (usually back loaded) and then when times are bad and tax revenues are down they have a bunch of crap they can't pay for and a bunch of employees they can't afford and things start falling apart, the layoffs come and they start looking to raise taxes......all of which exacerbate the situation and prevent a faster recovery
just before the stock crash in 2009 there were a bunch of senators and congressmen saying the same exact crap you are saying about why can't Harvard and Yale spend more money instead of hording it......never mind most of those idiots have their own investment portfolios that are invested as described above for the long term and never mind that a bunch of those idiots went to Harvard and Yale
then when the stock market crash came Harvard lost over 11 billion dollars from their 36 billion dollar endowment
http://www.nacubo.org/Research/NACUBO-Co...ables.html
you can see the historic tables above
so Harvard in a single year lost 11 billion dollars and that would have been an income of $550,000,000 based on a 5% annual payout
now Harvard, UT, Yale and the like go with a 3 to 5 year rolling average for their calculated payout of 4.5% to 5% of endowment value, but still if Harvard has listened to the mass manslaughterer and the like an spent spent spent they would have probably had $200,000,000+ more in annual expenses going into a time when their endowment value lost 11 billion and their annualized return from it lost $550,000,000......so they would have been in an even larger hole and it would have taken them even longer to climb out of it
it is like one of the broke pro sports articles talked about the $20,000 rolex paid for with cash.....if that $20,000 was put in an AAA insured tax free municipal bond for 30 years it would be worth $86,000 at maturity....but if spent on a blinged out rolex that only a fool would buy second hand it will be worth $14,000 in about a week and declining (especially relative to inflation) from there and when it gets beat to hell, loses the diamels on the dial, and stops working it will be worth $3,000 at the auction and that $3,000 will not even cover the full cost of the needed tuneup on the Ferrari before it goes to auction
as for Apple it takes a great deal of cash to roll out products and when you are not even sure what your next great product is or what it will cost to develop sitting on a lot of cash makes sense even more so when there are tax consequences involved for the company and the stock holders
there have been dozens if not hundreds of companies that have done special dividends and distributions of cash only to look up a few years later and find themselves broke, in the middle of a takeover attempt or unable to remain competitive in the market place because they got passed by in a single product or unforeseen new market and when you are under performing relative to past performance and relative to your competition that is not the time to go looking for money to borrow or to have a stock sale to raise more cash because the interest rates or the dilution of investors is in no way shape or form relative to the amount of money raised and it is a huge hit to share holders
(01-28-2014 10:56 PM)HogDawg Wrote: As for the college's, I've always wondered why they need such large endowments. With few exceptions, none of them seem to be using their endowments for the greater good. The endowment game for universities seems to have turned into nothing more than an arms race to be used against peers in college rankings.
About a year and a half ago, the guy that manages the University of Texas multi-billion dollar endowment made BIG news when he moved a BILLION of UT's endowment dollars into gold. Since then, the price of gold has fallen about 70%. I'm wondering if that guy is still gainfully employed. 
Here's a link to the story:
http://www.zerohedge.com/article/golden-...sical-gold
actually if you paid attention to the article it was not UT moving investments into gold at that time that was making the news it was UTIMCO moving PAST paper investments in gold into actual physical gold and storing that gold in a gold storage warehouse
UTIMCO had started acquiring that paper gold back in 2008 and was pretty much done with that when they moved to convert that paper gold to physical gold and it was that movement from paper to actual that was the big story at the time
and on a cost average UTIMCO is still up on their investment in gold and they also have liquidated a portion of that back in the first quarter of 2013 when gold was higher than it is today
also gold was at an all time high of 1891 and it is at 1270 today or down 621 and 621/1891 = 33% not 70% so gold is nowhere near down 70% from the all time high and UTIMCO acquired their gold for a cost average under $1,000 so while that investment is down from an all time high they are still net positive on that investment which when you manage in the 10s of billions sometimes you have to take small gains on a small portion of your portfolio because that is what makes the most sense for diversification and to offset more risky investments
and with physical ownership of the gold there was nothing preventing UTIMCO from leveraging those holdings with paper to others (which all could be done on paper, but represents a larger risk if you really believe there will be a run on people trying to take physical possession for their paper which most paper gold allows for a cash distribution in leiu of physical anyway which is why UTIMCO did not want paper gold at that time period)
(01-29-2014 02:26 AM)paintedblue Wrote: That must have been when Texas decided to go after Ryan O'Neal's Andy Warhol painting of Farrah Fawcett. "My god Lovey, we must restock the supply of hundreds we use to line Bevo's pen."
they went after the painting because it was willed to them in her will and they would have placed it on display not sold it
(01-28-2014 10:53 PM)MeanGreenGem Wrote: New North Texas president Smatresk was hired away from UNLV because he is supposed to be a goat ropin' son of a gun of a college fund-raiser. Under his watch as UNLV president, the Las Vegas-based school raised almost half a billion.
No secret UNT is seeking Tier 1 Research University status in the state of Texas and probably needs another approx $250-280 million to reach what seems to be the magic number of $400 million endowment. North Texas has been said to have reached other academic criteria for Tier 1 and seems to only need the endowment part to reach its Tier Research University goal.
5...4....3.....2......1...........come on now college smack boards version of a unholy trinity; that is, GL2Greatness (his name on GMG.com), "Someone" (his name on the MWC Forum) and Todge-Rodge (his name right here on the C-USA board) since they're all 3 the same person. Time for you to spew more pointless and off the target venom concerning North Texas. (Some think he is a bitter Texas State-Aquarena Springs alum who can't stand the fact that North Texas left for CUSA while passing the torch to Bobcat fandom to be the "only" Texas based SBC football school--a very lonely island to be on quite frankly.
BTW, "3 in 1" guy, did you enjoy watching those 35,000 North Texas Mean Green fans at the historic Cotton Bowl Stadium on New Years Day as UNT kicked UNLV's butt quite convincingly?
the $500,000,000 campaign for UNLV started in 2005 and ended in Nov. 2009 Neal S did not take the presidency of UNLV until Aug. 2009 so he was there for only the last few closing months of a 4 year campaign.....the campaign was suppose to be from 2005 to Dec 2008, but it was extended for a year because of the economic crash that hit Vegas especially hard.....so Neal S would not have even been there for any of the campaign if it had not been extended and he was only there for the final 3 months of the extended year of the full 4 year campaign
all of this is easily verified
http://www.unlv.edu/ourhistory/facts
2005 — UNLV launches its first comprehensive campaign, Invent the Future, with the goal of raising $500 million by December 2008.
and the campaign had been in planning since 2001
and as of now north Texas state is in the ending year and a half (Aug 2015) of an 8 year campaign for $200,000,000 and it would be extremely unusual for a university (or any organization) to start a brand new fundraiser immediately after a previous one ended so there may be a few that hype Neal S's fundraising, but they are not aware of the full facts and they are expecting things to happen that have very little chance of happening while he is at north Texas state
also it may be no secret to you that north Texas state only needs 400 million in endowment to get NRUF funding, but unfortunately for you those that actually allocate that funding know that north Texas state needs a great deal more than that to get NRUF funding like $45 million in restricted research as a first criteria before all others) and at least 2 other or 6 criteria (only one of which is endowment) before they will get NRUF funding
and it will probably be a decade before that $45 million in restricted research is reached (based on past performance) and even then it might be hard to have the 4 of 6 criteria needed (north Texas state currently meets 2 of the 4 needed out of 6)
UTD (most likely in 2016) will be the next to qualify for NRUF funding since they had 45 million in restricted research the year before last fiscal year then dropped down to only 43 last fiscal year (resetting the 2 year clock), but they should bump up over that again this year and next and they already meet 3 of 4 (out of 6) needed criteria and they are getting close on endowment and or PhDs graduated and if they can meet either one of those by the end of the 2014 fiscal year and also in 2015 and meet the restricted research they will qualify in 2016.......after that more than likely it will be UTA that is next to get NRUF funding probably in 2020
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