Departing Cornell CIO Plans to Start $150 Million Hedge Fund

(May 12, 2010) — Cornell University’s departing endowment chief James Walsh, 43, plans to start a $150 million hedge fund in London, targeted to institutional investors.

The departure reflects heightened turnover at endowments across the country following record losses at university funds last year. In February, along with Walsh’s announced departure, University of Florida’s CIO Michael Smith said he would leave the university to join Global Endowment Management as a partner. Dartmouth College in Hanover, New Hampshire, Brandeis University in Waltham, Massachusetts, and New York University in Manhattan didn’t immediately fill their CIO positions as they faced major declines in endowment returns and an uncertain economic climate. In October, Wesleyan University in Middletown, Connecticut, fired CIO Thomas Kannam.

“Having been an institutional investor for a number of years, we thought about what we would want in terms of terms,” Walsh said, according to Bloomberg. “We’re trying to align ourselves with investors.”

Walsh’s fund will invest in stocks, bonds, and other global easy-to-sell assets, he said in an interview with the news service. The fund, named Cayuga Capital Partners for Cayuga Lake near Walsh’s Ithaca, New York, house, will start trading in July.

Since joining Cornell in 2006, Walsh increased the size of the investment office to 25 people from 17. In February, Walsh announced he would be leaving his post with the university to return to England at the end of the current academic year.

The university lost 26% in fiscal 2009 and stood at $3.97 billion as of June 30 of that year. Harvard University and Yale University, the two wealthiest colleges in the country, battled similar declines in the wake of the 2008 financial crisis. As of February 17, Cornell’s endowment was up 10%.

Prior to joining Cornell, Walsh spent 11 years at Hermes Investment Management in London, where he became head of Strategy and Alternatives, after being the firm’s chief economist.