Sunday, November 2, 2008

Did Oklahoma State University Invest Prudently?

The Chronicle of Philanthropy reports that a professor at Oklahoma State University has questioned the wisdom of the University's investment of over $200 million earmarked for football stadium renovations in a volatile hedge fund run by a major donor.  The donor was T. Boone Pickens, who contributed $171 million of the original $202 million, and his hedge fund is energy-focused BP Capital.  While Pickens has perhaps been most recently known for his bold proposals relating to America's energy use and production, his career has long focused on the oil and gas industry including as the leader of BP Capital's investment team. 

The article describes the initial success of the investment, which doubled in approximately two years.  During the past three months it fell dramatically, however, ultimately to a value of only $125 million.  At this point the University cashed out to ensure it could complete the planned renovations.  Pickens also contributed an additional $63 million last week, to provide additional financial support for the same project.  The University's foundation also has a portion - less than five percent - of its almost half-a-billion dollars in assets invested in BP Capital.  University officials strongly defended their investment decisions, including in a foundation press release that focused on Pickens' most recent gift.


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