This Saturday, Louisiana residents will have the opportunity to vote in an election that will decide the next secretary of state and the commissioner of insurance. But University students in particular will have the opportunity to vote on an amendment to the state constitution that will affect the universities of Louisiana directly. Amendment No. 10, if approved, will allow universities to invest up to 35 percent of the endowment funds they receive from the state in private stocks and other investment strategies. The Daily Reveille published a letter from Chancellor Sean O’Keefe on Monday, in which he offered his support for the amendment, saying it would allow the University to “directly support our students and faculty.” We couldn’t agree more. The University is currently working to increase its endowment to more than $750 million by 2010, and we believe that this goal is outside the realm of possibility without the ability to invest state-allocated funds. The idea of investing university funds in private stocks is not unprecedented. According to the Boston Globe, Harvard University posted an increase of $3.3 billion, thanks in large part to investments in foreign stocks and commodities. And other universities across the country invest in private stocks with great success. But while we offer our support for the amendment, we urge the University to invest cautiously if it passes. A favorite strategy for universities to pursue when investing their endowments is hedge fund trading. Hedge funds operate similarly to mutual funds, but because they have few regulations and operate outside the Securities Exchange Commission’s control, they stand to make massive profits in a short amount of time. A deal that sounds too good to be true, and with the recent $6 billion implosion of Stamford, Conn.-based Amaranth Advisors LLC’s natural gas trading portfolio, hedge funds can often be just that. We ask that if the amendment passes and the University begins investing in private stocks that it does so prudently, as O’Keefe promised it would in his letter. So this Saturday, we ask the students of this University to get out to the election booth and give LSU the means to become what we all know it is – a University that deserves to stand among the finest universities in the country. And without money in its endowment fund, it’s a hard road for LSU to get there.
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