This month, Bill Ackman openly declared his allegiance to Donald Trump in the latter’s ongoing skirmish with Harvard University, asserting that the prestigious institution has devolved into “a political advocacy organization for one party.” Such a statement, while bold, raises eyebrows given Harvard’s reputation as a bastion of academia.
What’s particularly alarming for Harvard amidst this dispute is the misconception surrounding its vast endowment. While the figure may seem like an unassailable fortress of financial security, Ackman argues that it lacks the liquidity many presume it possesses.
In a detailed breakdown shared on Twitter/X, Ackman highlighted two principal reasons why the institution’s financial standing might be more precarious than the public perceives:
Firstly, there’s the issue of Harvard’s substantial $7.9 billion debt, which is likely to grow as the university grapples with diminishing government funding and a drop in alumni donations.
Secondly, a significant chunk of Harvard’s endowment is tied up in illiquid assets—think real estate, private equity, and venture capital—meaning that a quick cash injection is far from guaranteed. Ackman illustrated this vulnerability, explaining that highly leveraged investments can lead to dramatic shifts in equity values. For instance, a mere 15% drop in a real estate fund’s asset values, when leveraged at 60%, could translate to a staggering 37.5% decline in the fund’s equity value.
During my discussion with @nfergus, I suggested that if Harvard were pressed to liquidate significant portions of its assets to meet financial obligations, the realizable value of those private investments could plummet to as low as 40% of their current valuations. However, a well-respected expert in the field countered that my 40% estimate is excessively pessimistic, suggesting a more moderate discount of 7% to 15% might be more appropriate.
In an enlightening interview at the University of Austin, Ackman elaborated on the misalignment of asset valuations, stating, “One thing I believe is that the private equity, venture capital, and real estate portfolios are mismarked.” This sentiment encapsulates his broader argument regarding the vulnerability of prestigious endowments that rely heavily on illiquid investments.
Bill Ackman: “One thing I believe is that the private equity, venture capital and real estate portfolios are mismarked”
Ackman on Harvard and Yale endowment’s exposure to private equity and VC. One of the best clips I have seen
From his recent interview at University of Austin pic.twitter.com/MZN2CpITDN
— Boring_Business (@BoringBiz_) May 22, 2025
Ackman’s primary concern is clear: Without federal tax dollars, Harvard’s financial footing may be far shakier than its public image suggests. The university’s endowment is not a simple pile of cash waiting to be tapped; it is entangled in numerous investments, many of which could prove difficult to liquidate in times of need. If the situation worsens, Harvard could find itself in genuine financial distress, a reality that would likely send shockwaves through the higher education landscape.
