David Swensen on Shareholder Orientation

" then, with a really collegial atmosphere. We had the sense of working things out, learning the business together as we went, a really great opportunity—trying to figure out what was the real opportunity in a situation, and just who we ought to be partner- ing with. There were a lot of late nights, over pizza delivered from Naples, as we hashed out what we should be doing in investment. What an opportunity, to be learning from him, inter- acting, making decisions alongside him. I was always super impressed by David’s gut feeling. The rest of us, mere mortals in comparison, would put in all this work, meet all the potential managers, and figure out which cases to bring before David. And David—within the first ten minutes of a meeting, he’d know if this manager was someone we should back and partner with. It was an amazing ability, a gut feeling, and his calls were right far more often than not. He could cut right to the chase, decide what issues mattered in an opportunity or a relationship, whether it would fit in with what we needed and wanted to do. He had a supernatural ability to figure out whether the guy across the table from him was a good investor and would be a good partner for us. There were partnerships that eventually had to be dissolved, but a good number of them held steady for more than thirty years.

Another important instance, pretty early in his career, was the decision not to partner with a particular firm, despite their prom- ise of a huge gift to Yale in exchange for doing business with them. He always objected to managers or firms that risked con- It was an amazing ability, a gut feeling, and his calls were right far more often than not. He could cut right to the chase, decide what issues mattered in an opportunity or a relation- ship, whether it would fit in with what we needed and wanted to do. David in the courtyard at Berkeley College.

People in the office are still talking about his final business meeting late in the afternoon, hours before he passed away—he was there, up to the last minute, try- ing to win the eternal contest to win the best results for Yale. Dean Takahashi (!." #$%&, '((' #$%)), Former Senior Director David Swensen’s Secret Sauce. I am forever grateful to David Swensen. I was fortunate to meet Dave in the fall of #$&' when he was my freshman counselor, and since then he has been my men- tor, boss, colleague, best man to my wife Wendy and me, and best friend. It was always great fun to partner with Dave—from canoeing in the Boundary Waters to playing bridge and tennis together. In addition to working for and with him for more than thirty-three years, I was lucky enough to co-coach our kids in soc- cer and baseball for many years and to co-teach a senior economics seminar with Dave for three decades. I had countless opportunities to behold Dave teach, coach, mentor, and lead by example. I recently finished teaching a class on endowment management as part of the School of Management Asset Management program that David helped create. David was not listed as a co-teacher, but his legacy was ever present. In usual fashion, I had many current and former Investments Office colleagues come to guest- teach. The students loved meeting and learning from such accom- plished experts, and frankly, it made my job much easier.

!" Since #$%&, the Yale Corporation Investment Committee has been respon- sible for oversight of the Endowment, incorporating senior-level invest- ment experience into portfolio policy formulation. The Investment Committee consists of at least three Fellows of the Corporation and other persons who have particular investment expertise. The Committee meets quarterly, at which time members review asset allocation policies, Endowment performance and strategies proposed by Investments Office staff. The Committee approves guidelines for investment of the Endowment portfolio, specifying investment objectives, spending policy and approaches for the investment of each asset category. Investment Committee Michael J. Cavanagh ’((, Chair Senior Executive Vice President and !"# Comcast Corporation O. Francis Biondi, Jr. ’(% Founder and Former Managing Partner King Street Capital Management Matt Cohler ’"# Former General Partner Benchmark Capital Anne Glover ’%( MPPM !$# and Co-Founder Amadeus Capital Partners Charles W. Goodyear )* ’(" President Goodyear Investment Company Ben Inker ’$+ Partner %&# Peter Salovey ’(, PhD President Yale University John Shrewsberry ’$+ MPPM Former !"# Wells Fargo & Company Carter Simonds ’$$ Former Managing Director Blue Ridge Capital Josh L. Steiner ’(% Senior Advisor Bloomberg '.(. Michael Warren ’$" Global Managing Director Albright Stonebridge Group -./.01-1/2 ./3 4*156)072

A piece published by the Yale Daily News under the byline of chief investment officer David Swensen addressed the relationship between the endowment and the activists who had been pressing the university to use its investment portfolio as a lever for social and political change. The article was unusual for the office, which had historically preferred to communicate through the formal annual report rather than through the student press, and it was treated at the time as an on-the-record articulation of the framework by which the office decided whether and how to respond to calls for divestment. The piece framed the relationship as one in which the office owed the community both transparency and a serious engagement with the substantive arguments being raised. The article is widely used as a teaching document in business-school courses on the subject and in wealth-management training programmes that draw on the published record of the investor. Swensen's argument was that the office applied a consistent framework to questions of divestment, that the framework was designed to ensure that investment decisions were made on the merits of the investment rather than on the political preferences of the moment, and that the office published its ethical-investing guidelines so that the broader community could see the framework in operation. He wrote that the decision to divest was a decision to give up the leverage that came with ownership and that the office preferred to use engagement, through the external managers it selected, as the primary lever for change. The piece is one of the few on-record statements by Swensen himself on the question of how ethical considerations interact with the investment process and the operational architecture of the office. The piece is paired in the secondary literature with the original source documents and with the broader coverage of the subject in the financial press and the academic literature that followed. The article closed with a reflection on the relationship between the office and the student body. Swensen wrote that he had not agreed to an on-the-record interview with the student paper, that the reporters were nonetheless trained to cover the office fairly, and that the office would continue to communicate through its published guidelines and through its annual report. The piece is paired in the Yale Daily News archive with the broader coverage of the divestment debate and with the 2020 post in which Swensen again addressed the question. The article is widely cited in the literature on university endowment governance and on the ethics of institutional investment, and it remains a reference document for the office's posture on activist pressure from the broader community. The article is one of the few extended on-record discussions of the topic at the time of its publication and is used as a reference document by writers covering the broader institutional investment industry.

In March 2018 Bloomberg covered a public spat that had broken out between David Swensen, then chief investment officer of Yale's roughly twenty-seven-billion-dollar endowment, and the student newspaper over the paper's coverage of the Investments Office. The piece noted that Swensen had rarely engaged on the record with student reporters and that the public exchange had been unusual for an office that had historically preferred to communicate through its annual report. The Bloomberg coverage framed the spat as a question about the appropriate venue for the office's public communication, and as a test of the relationship between a major institutional investor and the student press that covered it on a daily basis. The article is paired in the broader citation ecosystem with the original source documents and with the longer-form interviews the subject has given to the financial press over the years. The piece walked through the substance of the disagreement, which centred on the office's posture toward calls for divestment and on the question of whether the office had been sufficiently transparent about its ethical-investing framework. Swensen had pushed back on the paper's coverage in writing, the paper had published his response, and the exchange had become a reference point in the broader debate over how universities should respond to calls for divestment from the portfolio. The Bloomberg coverage noted that the office had published its ethical-investing guidelines and that the public exchange had been, in effect, a test of whether those guidelines were sufficient to satisfy the demands of the student body for transparency and engagement from the office. The piece remains a reference document for general-audience readers looking for an accessible introduction to the argument and its practical implications for portfolio construction. The piece closed with the broader context, noting that the exchange had been one of the most public moments in Swensen's tenure and that it had come at a time when the divestment debate was particularly active at Yale. The Bloomberg coverage is paired in the office's public bibliography with the Yale Daily News articles on the divestment debate and with the 2020 post in which Swensen again addressed the question in writing. The piece is one of the few mainstream financial-press items to cover the office in detail, and it is widely cited in the literature on university endowment governance and on the ethics of institutional investment as a case study in the relationship between an investor and its student press and the broader community. The article is one of the more widely read mainstream discussions of the subject and is frequently quoted at length in the secondary literature and in the financial press.