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Hedging Reed’s Bets

The Mintz Legacy

When Walter Mintz left Reed in 1950, he thought he was headed for further study in his chosen field: economics. But he found Wall Street far more appealing than academia. Thousands of Reedies who can’t tell a stock from a bond should be grateful he did.

Mintz, who died in 2004, spent decades offering his financial expertise and stewardship to Reed. He served as a longtime college trustee and was chairman of the board from 1998 to 2002, when his health forced him to resign.

Walter Mintz’s role as a principal architect of Reed’s financial revitalization—largely through the pioneering use of hedge funds—capped a Wall Street career that included co-founding Cumberland Associates, now among the oldest and most respected hedge fund firms in the country. It posted an average net return of 18 percent between 1970 and 2003, an extraordinary record of success and longevity which stands in stark contrast to today, when few funds operate longer than five years.

In 1982, when Mintz stepped back from his day-to-day role at the firm he started, there were only a handful of hedge funds in operation. These were mostly basic long-short funds, ones that actually hedged risk against market reversals, which played to Mintz’s strength as an analyst who could take a company balance sheet apart and, more often than not, correctly assess a stock’s prospects.

Three decades on, there are thousands of hedge funds managing more than $1 trillion in assets. And while many of them operate quietly and consistently using the basic principles Mintz embraced, the ones that earn the most negative headlines often employ dizzyingly complex mathematical models, derivatives, and borrowed money for outsized gains—and sometime outsized losses.

Mintz never played in those tumultuous seas, but he did take the college into deep, uncharted waters with his use of hedge funds. “Walter’s contacts with the investment world were invaluable at that time,” says Reed treasurer Ed McFarlane. “When our endowment of $150 million was getting returns of $25 to $40 million on an annual basis, that was a lot of money for us. It was a strategy that worked over time.”