Sunday, August 15, 2010
Please people. It's one story about Harvard selling its shares in Israeli stocks: Harvard University fund sells all Israel holdings
In another blow to Israeli shares, the Harvard Management Company notified the US Securities and Exchange Commission (SEC) on Friday that it had sold all its holdings in Israeli companies during the second quarter of 2010. No reason for the sale was mentioned. The Harvard Management Company manages Harvard University's endowment...[Etc...]
People. Never go off the deep end on these things without waiting for an explanation or a statement. I find it highly unlikely that a fund like Harvard is going to divest from Israeli stocks -- all Israeli stocks -- for political purposes. You don't think Dershowitz is picking up the phone right now for answers?
Indeed, I've received the following email while waiting for the explanations to trickle in:
Non-event. Israel no longer an"emerging market"- now in a developed market index. These sales were part of a rebalancing- new holdings not reflected.
In other words, Israel's economy is so good it's no longer considered "developing," it's just a category shift...which sounds plausible to me. How much do you want to bet that that's pretty close to what it's going to be all about when we start hearing from on the record sources?
Update Monday 10:33am: The truth is starting to come out, and it is as predicted. Though the BDS'rs are, as usual, trying to take credit, The Media Line has this:
...Industry analysts, however, say the move was economic, not political.
"This is pure economics and I don't think it was because of the Arab boycott," Dr. Gil Feiler, founder of Info-Prod Research (Middle East) Ltd and director of the Middle East Business and Economic Research Institute at Interdisciplinary Center Herzliya told The Media Line. "They didn't eliminate their investments in Israeli stocks," he claimed. "They still have tens of millions of dollars invested, and if you are going to boycott Israel you sell all your stocks."
Shirley Adler, Investor Relations Coordinator at Cellcom, Israel's leading mobile communications firm, told The Media Line that the company had no official indication from Harvard as to the reasoning behind the decision.
Yaacov Heen, Cellcom's Chief Financial Officer, said the divestment is in response to Israel's recent reclassification as a developed economy.
"It's more technical than strategic or an issue against Israel," he told The Media Line. "I have asked my international relations people to check it and we believe it's because Israel was reclassified as a MSCI developed country in May 2010."
Formerly the Morgan Stanley Capital International, MSCI World, is an international index of 1,500 stocks from a couple dozen 'developed' countries and is often used as a benchmark by global stock funds. In May MSCI upgraded Israel from an 'emerging' economy to a 'developed' economy.
"There are some funds which invest only in emerging markets," continued Heen, the Cellcom CFO. "So Harvard had to sell our stock because Israel is no longer classified as an emerging market and they no longer have the ability to hold this stock within the emerging markets fund."
"We have seen a real change in the volume of trade since they reclassified us," he said. "In the longterm this is good news for us because there is now more money that can be invested in Israel, but in the short-term it means we need to work to find new investors."
"The problem is that Israel is very small compared to other developed countries so we have to compete on a much higher level," Heen added. "When we traded against emerging countries it was very easy to compete for investors."...
Also: Professor Bainbridge has an interesting look at the numbers and also speculates that this decision was pure business.
Update, and this should settle it: The following is the email that people are receiving in response to inquiries from John Longbrake, Senior Communications manager at the Harvard Management Company:
Thank you for taking the time to write.
The Management Company's most recent SEC filing details changes in holdings, as is routine, but no change in policy. The University has not divested from Israel. Israel was moved from the MSCI, our benchmark in emerging markets, to the EAFE index in May due to its successful growth. Our emerging markets holdings were rebalanced accordingly. We have holdings in developed markets, including Israel, through outside managers in commingled accounts and indexes, which are not reported in the filing in question.
I hope that this is helpful.
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