Investor Base: Lacking leadership

The US limited partner community was taken by surprise in February when it emerged that Lane MacDonald, managing director and head of private equity at Harvard Management Company, was leaving to become president of Crosby Advisors, the family office of Fidelity Investments chairman Edward Johnson.

It wasn’t so much about his destination; the appeal of Crosby is clear. But it was only four months since Harvard had announced MacDonald’s promotion, and only two months since he’d actually assumed the role. He’d previously been a managing director of the endowment’s public markets platform, responsible for overseeing relationships with external managers; in his newly-elevated role, he’d been tasked with helping to assess and reshape the endowment’s private equity portfolio.

What’s more, his departure means Harvard will be forced to find a third private equity chief in less than 12 months. MacDonald’s promotion came roughly six months after the departure of Peter Dolan, one of the most influential LPs in the industry, who left the endowment last April after nearly two decades.

It is understood that Harvard’s John Shue will again step in as interim private equity director while the endowment searches for a replacement. Harvard Management Company did not respond to a request for comment.

At least Harvard has bounced back from adversity before. In 2008, after losing about $10 billion (around 27 percent of its value), the endowment found new leadership in president and chief executive officer Jane Mendillo. It hasn’t quite got back to its pre-crisis level of $36 billion of assets under management yet, but it has recovered on Mendillo’s watch to $32.7 billion, as of September 30, 2013. That was thanks in part to its private equity portfolio, which generated an 11 percent return in fiscal 2013, slightly north of its 10.6 percent benchmark.

One thing’s for sure: MacDonald will remain a Harvard legend. Back in his own school days, the new Crosby president was captain of the university ice hockey team, and in 1989 led the Crimson to their first ever national championship – to this day, Harvard’s only NCAA title in any sport. MacDonald also played on the USA Olympic hockey team in 1988 and was inducted into the US Hockey Hall of Fame in 2005. Not an easy act to follow.