Felix Salmon

Harvard isn’t divesting from Israel

By Felix Salmon
August 16, 2010

The noise surrounding a perceived rotation out of Israeli stocks by the Harvard endowment is really rather hilarious. Benjamin Joffe-Walt has managed to amass a whole sequence of quotes from people who have no idea what they’re talking about: one person is calling on “all academic institutions in the US” to follow Harvard’s lead and “divest from Israeli war crimes”; a second claims Harvard “still have tens of millions of dollars invested”; and a third comes up with the convoluted explanation* that it’s all to do with the fact that Morgan Stanley no longer considers Israel to be an emerging market:

“There are some funds which invest only in emerging markets,” continued Heen, the Cellcom CFO. “So Harvard had to sell our stock because Israel is no longer classified as an emerging market and they no longer have the ability to hold this stock within the emerging markets fund.”

Needless to say, university endowments, more than any other investors, are entirely unconstrained by such concerns.

The fact is that the Israeli holdings itemized in Harvard’s 13-F only added up to $41 million in the first place, or about 0.15% of Harvard’s total endowment. But it’s all pretty meaningless anyway, since the 13-F itself only accounts for a small fraction of the endowment’s total exposure.

The chances of this move being at all politically motivated are remote: the most recent concerted attempt that Joe Weisenthal can find to get Harvard to divest from Israel dates all the way back to 2002. And I’m sure that if you looked at all endowment 13-Fs on a quarterly basis, you’d find that every quarter a pretty large number of endowments will turn out to have sold out of some small market or other. It’s just that by sheer coincidence, this time it’s the two big hot-button names, Harvard and Israel, and hence there’s lots of headlines.

Next quarter, or the one after that, a few Israeli holdings are bound to reappear in Harvard’s 13-F. I wonder whether anybody will notice that.

*Update: The explanation might be convoluted and implausible, but according to a statement from Harvard, it also seems to be true!

The University has not divested from Israel. Israel was moved from the MSCI, our benchmark in emerging markets, to the EAFE index in May due to its successful growth.

Our emerging markets holdings were rebalanced accordingly. We have holdings in developed markets, including Israel, through outside managers in commingled accounts and indexes, which are not reported in the filing in question.

For some reason, it seems that Harvard’s EM holdings get itemized in its 13-F, while its EAFE holdings are run through external managers and don’t get itemized. No big story here.

6 comments so far | RSS Comments RSS

They might notice when asked by Israeli authorities for a copy of their passport for “anti-Money Laundering” reasons…

Posted by FifthDecade | Report as abusive

To the author- it would be most relevant for you to determine if the stocks were sold -before- OR -after- the change from MSCI status. That will tell a lot about the motivation of the fund mangers. All the bloggish speculation on both sides might be made credible if Harvard provided that key piece of information. Absent that information, one believes that the Harvard move is indeed part of a boycott mentality.

Posted by dep | Report as abusive

If Harvard where doing it to boycott, they would say so. No one would boycott something and then not publicize it; it defeats the entire point of a boycott.

Posted by ZPT | Report as abusive

Obama began his political career when he organized a student movement to compel Occidental College Board of Directors to divest all investment related to South Africa until apartheid was stopped.

Obama would have used his charisma to do the same for Israel until Israel stops apartheid, but he is constrained by the old Washington forces from BOTH the democratic and Republican parties.

The more rational Jewish politicians’ voices were muffled by the old guard who brought down the American economic system and many Americans’ confidence in the future.

Americans voted indisputedly for change, but many senators did not listen, including democratic senators and republicans alike.

If Harvard wants to remain the pristine academic leader of the conscience of Americans, it must publicly criticize the apartheid portion, and the blatant discrimination of all non-Jewish minorities(Asians, Africans, not just Palestinians)in the Israeli constitution.

I, for one, is planning to vote against incumbents, but for Obama. Unless my senator and congressman comes out strong against Israel about the American who died on the flotilla, I’m not going to vote for them again this November.

Posted by Janeallen | Report as abusive

Jane, they voted for someone who wasn’t Bush. If the democrats had put up an actual donkey in the same circumstances it still would have won. In what way shape or form did they vote for “change”?

You may want to look up the word apartheid and check the rights that Israeli Arabs have vs Israeli Jews but then facts might get in the way of your views.

PS love the way that a group of people making up less than 2% of the US population and heavily concentrated in a couple of states and who overwhelmingly vote for the Democrats no matter who he is in crazy world somehow end up “controlling” the US government.

Posted by Danny_Black | Report as abusive

Yeah it is a non-story but like most anti-Israeli stories is a case of people pushing out lies that get regurgitated by churnalists too lazy to bother do any actual fact checking. Luckily there are enough of these that the anti-Israelis can present it as fact in the never-ending feedback loop.

Posted by Danny_Black | Report as abusive

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