The simple slogan of protest runs headlong into the complexities of modern finance.
At the University of California, Los Angeles, recent pro-Palestinian demonstrations have echoed slogans heard at protests on campuses across the U.S. during the Israel-Gaza war: They are calling for the university to cut financial ties with Israel. “Leave now,” read one sign near a protester's camp this week.
These demands came even as students had little information about where America's college endowments actually put their money: Universities, which have a staggering combined total of $850 billion, are required to disclose some of their largest publicly traded stocks in annual regulatory filings, but not all of their holdings. Universities generally refuse to reveal the exact details behind their investments. Even public university annual reports and regulatory filings reveal very few details.
“Big endowments want to keep their secrets,” says Charlie Eaton, an associate professor at the University of California, Merced, who studies the issue. They worry that competitors might learn of their money-making strategies, or that the complexity of their holdings might make full disclosure impossible.
A Post review of annual reports, Securities and Exchange Commission and IRS filings and financial databases found several signs that student protesters were trying to draw attention, including that a Michigan State University endowment holds $480,000 in bonds for defense industry leader Lockheed Martin. The Texas school's endowment had millions invested in Israeli shekels but sold them last year. It appears to still have about $750,000 invested in Qatari riyals. Most of the endowment's direct investments are in But the investments often seem more interesting than controversial: An Ohio State University endowment invested in a company that sells cat food directly to consumers.
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The University of California Board of Regents system, which manages $17.7 billion in endowments for several state universities, including about half of UCLA's $7.7 billion endowment, appears to have few obvious targets for divestment. The endowment is the third-largest public school endowment in the nation and the 10th-largest among all universities, according to a survey by the National Association of University Administrators.
The company holds stocks in companies that mix defense contracts with other business lines, including: According to SEC filings, it has invested about $890,000 in Honeywell International, $640,000 in General Electric and $2.8 million in Air Products Chemicals, which supplies bulk gases such as helium and has an office in Israel. The California Regents Foundation also reports a $258 million stake in Blue Owl Capital Corp., which owns some lesser known aerospace and defense contractors, including cybersecurity and data company Peraton.
UC leadership has opposed the movement to divest and boycott Israel, with the university's president issuing a statement last month saying the move “violates the academic freedom of students and faculty and the free exchange of ideas on campus.” The statement also noted that the school's tuition fees are disinvested, undermining protesters' argument that tuition fees also need to be divested from Israel.
A school's endowment typically comes from donations and investment income, with a small amount (less than 5%) withdrawn each year to cover tuition fees. They pay professors' salaries, subsidize tuition fees, and build new buildings.
Experts say fund managers don't like such pressure campaigns because their mission is narrowly focused on making money.
“They're legally required to focus on endowment returns,” said Chris Marsicano, an assistant professor at Davidson College who studies divestment movements.
The largest funds hold most of their assets in mixed investment funds. It would be difficult to cut off funding to companies operating in Israel (which includes hundreds of blue-chip companies such as Google-parent Alphabet and McDonald's), Marsicano said, which would wipe out the entire mainstream investment sector, likely lowering returns and cutting funding to universities.
“It's going to be very hard to justify on a fiduciary duty basis,” Marsicano said.
The current protesters are following a long tradition of activists targeting donors, big sums of money over which they feel they can exert influence.
“Students with time on their hands are smart and they get really engaged,” Eaton says.
In the 1980s, students protested against South Africa's apartheid policies and pressured universities to cut ties with the country. Around 150 universities divested to varying degrees. Some universities subsequently adopted policies banning investments in fossil fuels, and then private prison companies.
Regardless of how investment managers feel about the protesters' demands, it will become much harder to avoid investing in Israel.
“So far we haven't seen much movement from these universities because of the complexities and fiduciary responsibilities,” Marsicano said.
One of the most transparent endowments is Michigan State University, which reports small direct investments in defense stocks. Records show the university's endowment was worth $4 billion last year, including $1.4 billion in broad stock index funds, $1.3 billion in private equity funds and $880 million in hedge funds. In addition to the Lockheed Martin bonds, the university held about $256,000 in bonds from another defense contractor, Northrop Grumman. But This was significantly less than the $376,000 in securitized notes Delta holds backed by its SkyMiles program.
Michigan State University's investment office did not respond to a request for comment.
If Michigan State University is ordered to divest completely, the endowment could be forced to sell $433 million in shares across a range of funds, including BlackRock Emerging Markets Hedge Fund and GMO US Quality Equity Fund Class VI. Limited disclosures about those investments show the endowment holds common stock in companies including Microsoft, Amazon and Alphabet, all of which are banned as part of the divestment plan pushed by protesters.
Private school endowments tend to be less forthcoming with disclosures. Details have been released about less than 0.5% of Yale University's $40.7 billion endowment holdings, the Yale Daily News reported. The fewest signs of pressure from protesters so far have come at Brown University, which has a $6.2 billion endowment. Brown's president has confirmed that the school's leadership will vote in October on a plan to divest from companies with ties to Israel. The University of Minnesota has also confirmed that protesters will discuss divestment with school officials.
The largest endowment in the country (first or second only to Harvard, depending on the accounting) is managed by UTIMCO, the investment management company for the University of Texas and Texas A&M University school systems. It manages $55 billion. The company's report goes into great detail, showing that the endowment appears to have distanced itself from investments in the Israeli shekel between August 2022 and August 2023, during which time a Hamas attack on October 7 sparked the broader war that is now the focus of protests. It reports holding no shekel-denominated equities in 2023, down from about $360,000 the previous year. It also has no investments in foreign and local Israeli governments in 2023, down from about $7.3 million.
UTIMCO officials did not respond to requests for comment.
But despite its size, UTIMCO shows little direct exposure to Israel, except for an investment of $4 million to $8 million in a venture capital fund managed by Tel Aviv-based TLV Partners, according to an SEC filing at the end of 2023. The firm’s managing partner declined to comment.
The power of the divestment movement isn't driven by economic influences, said Marsicano, the Davidson College professor.
“This is a symbol to promote a ceasefire and draw attention to the actions of the Israeli government,” he said.
But student protesters could try another tactic that's likely to be ineffective amid the flurry of demands: They could invest in U.S. defense companies and other businesses they want to influence. That way, they could become activist investors and push for the changes they want to see from the inside, Marsicano said.
“As a professor of public policy, I would love to see that,” he said. “I think it would be really intriguing for any group of students to do that.”
