Business
Yale’s Endowment Selling Private Equity Stakes as Trump Targets Ivies
Yale University’s famed endowment has been trying to offload one of the largest portfolios of private equity investments ever in a single sale, a move that reflects the pressures on both Wall Street and higher education under the Trump administration.
The Ivy League school has sought buyers for up to $6 billion in stakes in private equity and venture funds, according to three people briefed on the sales process, amid uncertainty about its federal funding and the reality that many of these investments have not delivered the outsize returns that Yale expected.
Yale is now close to completing a sale of roughly $3 billion of the portfolio and is selling the assets at a slight discount, one of the people said.
“This is a big deal,” said Sandeep Dahiya, a professor of finance at Georgetown University who has conducted research on the performance of endowments. “The investor that was the lead architect of investing in the private equity markets is pulling in its horns.”
For decades, Yale has been regarded as a pioneer for shifting its investments away from stocks and bonds into longer-term holdings managed by private equity and venture capital firms. But last year, Yale’s $41 billion endowment generated returns of just 5.7 percent, underperforming the S&P 500 and other major indexes. Yale said its 10-year return averaged 9.5 percent annually.
Private equity investments typically generate cash for endowments and other investors after they sell or take public the companies in which they have invested. But lately, private equity and venture firms, which make up about half of Yale’s endowment, have struggled to sell their stakes in companies and return cash to investors. That has driven down returns.
Yale’s quest to exit investments in both well-known firms like Bain Capital and lesser-known ones like Golden Gate Capital, Clayton Dubilier & Rice and Insight Partners is a sharp U-turn for an endowment that has long proselytized the value of private equity and other long-term investments.
Knowing that some stakes would be harder to sell than others, Yale’s bankers offered potential bidders two separate lists of funds: “core” funds, the ones they most wanted to sell, and “sweeteners,” the better-performing ones, according to two of the people briefed on the sale.
While buyers would receive only a small discount of about 5 percent on the private equity stakes, Yale willingness to sell assets that were once highly desirable at less than full value reflects the industry’s challenges.
The sale comes at a critical juncture for universities. While President Trump has spared Yale the kind of punitive funding cuts he has leveled against other Ivy League schools such as Harvard, Yale is grappling with decreases in federal research funding that have hit higher education broadly. Republicans in Congress have also proposed steep tax increases on endowments.
Yale is on track to spend roughly $2.1 billion from its endowment in 2025, which accounts for just over one-third of its annual budget.
In a statement provided to The New York Times, a representative for the Yale endowment acknowledged the sale, but called private equity “a core element of our investment strategy.” The statement added, “We are not reducing our long-term target to private equity.” The university said it was also looking to invest in other private equity firms.
Yale’s bankers tried to keep the process discreet by giving the sale the code name Project Gatsby. (Two of the main characters in F. Scott Fitzgerald’s novel set in the roaring 1920s went to Yale.) But Yale’s move is widely viewed on Wall Street as a harbinger.
At least two other large universities are preparing to sell some private equity assets, and dozens of U.S. and Asian pension funds are also looking at exits.
Lawrence Siegel, a former director of research at the Ford Foundation, called Yale’s move “a wake-up call” for investors.
“It’s also Yale trying to get out before everyone else,” Mr. Siegel said.
The Swensen Model
When David Swensen, a former Lehman Brothers banker, joined Yale as its chief investment officer in 1985, the university’s endowment was valued at about $1.3 billion. (Harvard’s had $2.7 billion.)
During 2021, the year that Mr. Swensen died, Yale’s endowment had swelled to $42.3 billion, behind Harvard but billions ahead of almost every other university endowment.
To achieve that, Mr. Swensen shifted Yale’s investments from a traditional portfolio of 60 percent stocks and 40 percent bonds. After getting to know fund managers in private equity and venture firms, Mr. Swensen moved a relatively large slug of Yale’s endowment into long-term assets, often investing in those funds for decades.
Other universities watched Yale’s returns and started to follow the Swensen Model, as it came to be known.
Yale’s early affection for private equity provided the perfect advertisement for an industry looking to attract new investors.
“Do you want to be smart like Yale?” said Ludovic Phalippou, an economist at the University of Oxford, in describing the pitch.
University endowments now invest an average of about 17.1 percent of assets in private equity funds, according to studies by the National Association of College and University Business Officers. That’s up from just 5.4 percent in 2007 before the financial crisis.
Universities and private equity firms have developed a symbiotic relationship. Endowments typically pay private equity firms roughly 2 percent of the money they manage and 20 percent of the profits they generate.
Those fees have helped mint slews of billionaires, many of whom sit on university boards and make large donations to the schools.
Yale’s senior trustee, for example, Joshua Bekenstein, has worked at Bain Capital since its inception in 1984, four years after he graduated from Yale. The Boston-based firm was one of the earliest to jump into the buyout business. It scooped up companies like Dunkin’ Donuts, Clear Channel Communications and Gymboree, added debt and then tried to sell them for a profit. Gymboree, a children’s clothing retailer, filed for bankruptcy seven years after Bain bought it.
Bain now manages $185 billion, including at least roughly $1 billion for Yale.
For more than a decade after the financial crisis, U.S. private equity firms reliably generated average returns, on paper, in the mid- to high teens, according to the data provider PitchBook. But the firms generated average returns below 10 percent in 2022 and 2023, and just over 10 percent in 2024.
Another challenge: Deal making has been slow for several years, and private equity firms have had difficulty selling stakes in companies and returning cash to investors at levels reached in previous years. Despite optimism that the second Trump administration would spur a deal-making resurgence, the volatility around tariffs has made companies wary.
In 2024, the firms returned about 15 percent of the value of their funds to investors in cash, compared with between 25 and 35 percent in prior years, PitchBook data shows.
The winnowing returns come after private equity firms, from 2021 to 2024, raised record sums from pensions, endowments and sovereign wealth funds, PitchBook data shows.
Steven Meier, chief investment officer for the New York City Retirement System, acknowledged that returns for private equity “haven’t been great.”
The system, which manages a $280 billion investment portfolio for the pensions of teachers, firefighters and other public employees, just sold $5 billion of its stakes in private equity firms. Mr. Meier said the city would continue investing in private equity but was looking to pay lower fees.
He added that the funds’ recent returns to pensions and endowments had also been “disappointing.”
Project Gatsby
When Yale’s bankers at Evercore Partners began shopping the endowment’s private equity portfolio in April, they didn’t disclose the seller’s identity.
But they left a clue: They called the sale Project Gatsby.
Bidders were asked to select funds from a combination of the “sweetener” and the “core” pool of assets and to name their price by May 6, with Yale’s bankers aiming for a June 30 closing, according to sales documents viewed by The Times.
Some details of Yale’s sale were reported earlier by Secondaries Investor and Bloomberg.
The biggest single position that Yale has been shopping is a roughly $600 million stake in a 2007 fund run by Golden Gate Capital, a San Francisco-based private equity firm known mostly for investing in retailers like Ann Taylor, Eddie Bauer and PacSun. Two people familiar with the sale said Yale did not expect to sell the entire stake.
The Golden Gate stake was marketed as part of the core portfolio, among the assets that the bankers most wanted to sell.
Evercore’s bankers also offered stakes in Insight Partners and General Catalyst. At least one stake that was labeled a “sweetener,” Clayton, Dubilier & Rice, was not expected to be sold because Yale has been able to get the price that it wanted on other stakes, according to two people familiar with the sale.
Yale has also been offering to sell nine funds managed by Bain Capital, with a total value of about $1 billion. A person familiar with the deal said the school was on the verge of selling about $500 million worth of those Bain stakes.
Business
U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders
The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.
The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.
Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.
The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.
The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.
Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.
“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.
The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.
Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.
Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.
Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.
Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.
Business
California-based company recalls thousands of cases of salad dressing over ‘foreign objects’
A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”
The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.
Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.
None of the 42 locations where the product was sold were in California.
Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.
“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”
The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.
The company recalled the following types of salad dressing:
- Creamy Poblano Avocado Ranch Dressing and Dip
- Ventura Caesar Dressing
- Pepper Mill Regal Caesar Dressing
- Pepper Mill Creamy Caesar Dressing
- Caesar Dressing served at Costco Service Deli
- Caesar Dressing served at Costco Food Court
- Hidden Valley, Buttermilk Ranch
Business
They graduated from Stanford. Due to AI, they can’t find a job
A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.
The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.
When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.
Top tech companies just don’t need as many fresh graduates.
“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”
While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.
Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.
“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”
The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.
Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.
“The industry for programmers is getting very oversaturated,” Akgul said.
The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.
Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.
It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.
In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.
Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.
Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.
A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.
“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”
To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.
Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.
Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.
Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.
As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.
“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”
After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.
Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.
“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”
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