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The U of M Google Endowment

I thank a reader for pointing out this earlier indication of why Stuart Mason is so enthralled with Google.

Wow, Stuart, you and Google have a history:

The Google Endowment

We don't pretend to be great investors here -- we work for a newspaper, after all! But every time Google stock soars to a new record high, it's hard not to think back about what might have been a continuing gold mine for the University of Minnesota.

The U endowment ten years ago put roughly $150,000 into a partnership led by the California venture capital firm Sequoia Capital. The partnership included a stake in a little-known startup called Google.

Google, of course, became huge. When its stock started trading publicly in 2004, the U's seed investment translated into some 250,000 shares at about 47 cents to 50 cents a share. The stock went crazy, and the U began liquidating its position. By the middle of 2005, the U had sold its initial Google holdings for about $195 a share on average, bringing the university close to $50 million.

I reported those facts in early 2006 as part of a story on the endowment and its dramatic shift away from tradtional U.S. stock investments and into real estate, hedge funds, junk bonds and other alternative investments.

At that point Google was trading at about $400 a share but Stuart Mason, the endowment's chief investment officer, wasn't losing sleep over selling off the Google stake. "We are so happy, we can't stand it," he said then.

Google this morning broke $700 a share, nearly twice its price of two years ago and more than three times as much as what the U got for its shares. Had the U held onto its chunk, it'd be worth about $175 million -- or more than 10 percent of the entire endowment.

It's hard to complain about a $50 million payoff on an investment. But, wow, if they'd held onto the Google shares, there'd be a lot of high-fives this morning and lots of talk about the good times continuing to roll. Stock analysts expect Google's per-share earnings to jump more than 30 percent next fiscal year.

-- Paul Tosto

In English, you blew it Stuart. And so we should trust you with more of our money to invest in secret? I don't think so.


Drat, we sold too soon. Just think of all the vice-presidents we could have hired!

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