Et Tu, Harvard?

On Friday, Harvard University reported in an SEC filing that it has sold all of the shares it owned in Israeli companies. The total wasn’t large, by Harvard’s standards, around $39 million, and the university didn’t offer an explanation. But it seems unlikely that Harvard’s portfolio managers would simultaneously decide that it was time to sell all shares in five different companies, with nothing in common other than the fact that they are located in Israel. So, unless some other explanation is forthcoming, it seems that Harvard may quietly have divested its Israeli holdings on political grounds.
If this is right, it assorts oddly with Harvard’s acceptance of large amounts of money from Saudi Arabian sources. Also, what are Harvard’s largest securities holdings? Two ETFs, each worth $295 million, one in Chinese equities and the other in emerging markets. So Israel doesn’t meet Harvard’s moral test, but China does; and it would be interesting to see what countries are included among those emerging markets.
There is a pretty clear pattern here–again, assuming that the five nearly-simultaneous sales of shares in Israeli companies were not coincidental. Harvard is happy to do business with oppressors–real oppressors, that is–as long as there is enough money in it. China and Saudi Arabia have, in sheer monetary terms, a lot to offer. But taking a “principled” stand against Israel, still the Middle East’s only democracy (unless you count Iraq, on which the jury is still out) and the only country in the region with a Western human rights sensibility, is cost-free. Sort of like banning military recruiters.
SCOTT adds: Martin Solomon pooh-poohs the report of Harvard’s purported disinvestment in Israel while he awaits a formal explanation from Harvard. Solomon’s source tells him: “Non-event. Israel no longer an ’emerging market’ — now in a developed market index. These sales were part of a rebalancing — new holdings not reflected.”
MORE: Solomon has now added this message from the Harvard Management Company confirming the information he had recevied from his sources: “The Management Company’s most recent SEC filing details changes in holdings, as is routine, but no change in policy. 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.”

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