Notebook - March 24, 1999

Wu's woes impact endowment
Investment turns south with Asian economies

In November 1995, Hong Kong entrepreneur Gordon Y.S. Wu '58 made big news when he pledged to give Princeton $100 million -- a tenth of his net worth at the time -- to help launch its five-year fund-raising campaign marking the university's 250th anniversary. Like all fund-raising pledges, it was credited at full value as a gift, even though only a portion of it was in hand. Earmarked for teaching and research in the School of Engineering and Applied Science, it ranked as the largest gift ever made to Princeton and the largest by a foreign national to any American university.

On February 10, a story of a different sort about Wu's gift appeared on the front page of The Wall Street Journal. It reported that, sometime after Wu had made his $100-million pledge, Princeton had taken the donor's advice to invest in Hopewell Holdings Ltd., his Hong Kong-based company. Wu told the Journal that the Princeton University Investment Company, or Princo, the semiautonomous firm that oversees the management of the university's portfolio, bought about 2 percent of Hopewell Holdings' shares, which trade on the Hong Kong market. The Journal estimated that Princeton paid $50 million on an investment that today, following the recent collapse of Asian economies, would be worth less than $10 million.

More concrete figures were soon forthcoming. Following up on the Journal story, an enterprising reporter at The Daily Princetonian gained access to a university accounting statement showing that in the two years between June 30, 1996, and June 30, 1998, Princo purchased more than 165 million shares of Hopewell Holdings at a total cost of more than $93 million -- an investment that as of last June 30, according to the Prince, would have been worth $18 million. Princeton's endowment is currently valued at $5.6 billion.

The Journal also revealed that the Asian problem had reduced Wu's net worth from $1 billion to $100 million, necessitating a possible restructuring of his $100 million pledge. To date, according to the Journal, Wu has made good on a third of the pledge, which he had originally hoped to pay off in installments over five years. Wu remains adamant about honoring his commitment in full, although it may take him 10 years instead of five to do so. As he told the Journal, "I have not accomplished my purpose in life unless I fulfill that pledge."

The Journal pegged Wu's payments to date at $33 million, but university sources say the figure is closer to $30 million. Whichever number you choose, it's clear that, at least on paper, the university so far has "lost" more on its investment in Wu's company than it has gained from Wu's payments against his pledge.

As well as calling into question Princo's investment wisdom, the Journal story hinted at the possible impropriety of its seeking -- and following -- the advice of a major donor to buy his company's stocks. But as Professor of Economics Uwe Reinhardt pointed out to the Prince, the donation and investment "were completely separate transactions" made months apart. In an interview with paw, Reinhardt said that Wu's advice might have been improper had he been a trustee of Princo or the university, which he was not. According to university spokesman Justin Harmon '78, other experts sought out by Princo confirmed the soundness of buying Hopewell stocks. Reinhardt also noted that Wu could not have personally profited from the university's purchase of publicly traded shares in his company.

The university's decision to invest in Hopewell Holdings is easy to criticize in hindsight, but at the time it amounted pretty much to conventional wisdom. Like their counterparts at many universities, as well as institutional investors generally, Princeton's portfolio managers looked on the booming Pacific Rim market as the place to be. Assuming that Asian economies recover, that bet may still prove right.

Whether the university takes a profit or loss on the investment, no one who knows Wu doubts his determination to pay off his $100 million pledge. At the Alumni Day luncheon on February 20, Richard Scribner '58 announced that the university to date had raised $714 million toward its $900-million goal for the Anniversary Campaign, which ends on June 30, 2000. According to Van Zandt Williams, Jr. '65, the vice-president for development, every dollar of Wu's pledge continues to be counted in the campaign's running total. He also noted that part of Wu's pledge was in the form of challenge money that has generated $30 million in pledges from other donors.

Meanwhile, the university is hanging on to its depreciated stocks in Hopewell Holdings, one of Asia's largest commercial real-estate and infrastructure developers, on the reasonable assumption that over time their value will increase. Wu told the Journal he is confident his company will weather the region's economic malaise, particularly once a toll road he built in China begins generating significant revenues, probably in 2002. "The game ain't over till it's over," he said, quoting baseball great Yogi Berra.

Talking to the Prince, Wu drew on a metaphor from another sport. He reminded his interviewer that when the Princeton men's basketball team played arch-rival Penn on February 2, it came back to win after being down 33-9 at halftime. Like the Tigers, he said, "I'm behind schedule, but who knows what the second half will be like."

-- J.I. Merritt '66

 

On course evaluations

by Professor of economics Harvey S. Rosen

Course evaluations provide a useful way for instructors to find out how effective their teaching is.
While the promise of anonymity encourages honest and frank feedback from the evaluators, I am sometimes frustrated by not being able to respond to their critiques. I therefore appreciate this opportunity to reply publicly to some of the comments I received on the recent evaluations of my course, Economics 102.

LECTURES

Student 1: "Rosen rocks. His lectures are the best."

Response: Occasionally, I hear faculty colleagues criticizing the Admissions Office for admitting a lot of dim undergraduates. But I've always thought that Prince-ton's students are very smart -- and discerning.

Student 2: "Lectures were boring and sucked."

Response: On the other hand, some dolts do manage to squeeze in through the cracks.

 

Student 3: "Rosen is over-advertised. Bring caffeine."

Response: I'm delighted to hear that no illegal substances are required to get through the lectures.

 

Student 4: "Too much information too fast, especially for an introductory course."

Response: I'll try to slow down if I teach the course again.

Student 5: "The lectures were often slow-paced."

Response: I'll try to go faster if I teach the course again.

Student 6: "The class was well paced."

Response: I'll do it just the same way if I teach the course again.

 

Student 7: "Too many graphs."

Response: Sorry, but teaching economics requires a few equations and graphs now and then.

Student 8: "We didn't use calculus."

Response: Sorry, but teaching economics requires a few words of English now and then.

 

READING

Student 9: The book "was especially clear and interesting."

Student 10: "Reading was bad."

Response: Did both of you buy the same book?

 

EXAMS

Student 11: "Fairly given, and fairly graded."

Response: Actually, I now think that the exam may have been a tad hard. I'm glad that you didn't mind.

Student 12: "Midterm was insanely difficult."

Student 13: "Too simple."

Response: What can I say?

 

OTHER COMMENTS

Student 14: "Too many stupid people voicing up in precept rather than attending office hours."

Response: I'm always impressed by the sense of community among the undergraduates.

 

Student 15: "H. Rosens (sic) public speaking skills are atrocious the (sic) fluidity of the lecture is quite often screechingly halted by him (sic) standing at the podium collecting his thoughts saying ah, uh, ah, uh for 30 seconds."

Response: I'm really glad that my job around here is teaching micro-economics and not writing. In any case, this was my 15-year-old son's second favorite response (right after student 2's observation that I sucked).

 

Student 16: "Blinder is very funny and very clear."

Response: When you've seen one economist, you've seen them all, I guess.

 

This essay appeared in the February 9 issue of The Daily Princetonian.

In brief

Math Prize: Professor of mathematics Elias M. Stein won the 1999 Wolf Prize, one of the highest honors in the field of mathematics, for his "fundamental contributions" to developing methods for analyzing wave energies, such as light and sound. He has spent much of his career studying and improving upon a mathematical technique called Fourier analysis, which allows scientists to understand the harmonic content of waveforms. Stein shared this year's prize, which includes a gift of $100,000, with Laszlo Lovasz of Yale.

 

Sachs Scholar: The former editor-in-chief of The Daily Princetonian, Christine Whelan '99, has been awarded the Daniel M. Sachs '60 scholarship. A politics major, she will receive a grant covering two years of study at Oxford University, where she plans to earn a master of philosophy degree, concentrating in economic and social history.

 

New Institute: Professor in the life sciences Shirley M. Tilghman will oversee the planning, and then serve as the first director, of a new multidisciplinary Institute for Genomic Analysis, the university's pioneering effort to translate the expanding wealth of information on genetic sequences into discoveries about nature and biology. The university is seeking to raise $40 million to construct a new laboratory and another $20 million to hire faculty and fund research and start-up costs.

 

Student death: Sean Miles '01, a resident of Butler College, died on January 10, in a car accident near his hometown of Bozeman, Montana. He participated in the college council and intramural athletics, and he worked part-time in Dining Services.

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