Billionaire investor and Harvard University alumnus Bill Ackman voiced concerns on X on Monday about the health of the woke university's endowment. This came in the wake of a Bloomberg report earlier that day, indicating the university was "considering" the sale of $1.65 billion in bonds - nearly two months after the resignation of Harvard president Claudine Gay. 

According to a "Voluntary Notice of Potential Issuance of Bonds" from the Ivy League school, it's planning to sell $750 million of taxable fixed-rate bonds the week of March 4 and $900 million of tax-exempt bonds in April. 

"Proceeds of the Series 2024A Bonds will be used for general corporate purposes," the notice read. 

As for the Series 2024B Bonds, the university said the use of proceeds will be for "new capital projects and may also include refinancing, including through a tender and/or exchange, of a portion of the University's Series 2016A bonds." 

Ackman wrote a brief note on X, highlighting the challenges facing Harvard's endowment, including "illiquid assets" and a "dramatic decline in donations" as probable factors behind the university's recent bond offering announcement: 

The substantial majority of the @Harvard endowment is invested in illiquid assets, principally private equity, real estate, and venture capital. Not reflected on the balance sheet are commitments to new funds of the same type.

Like most endowments, @Harvard models expectations of fund distributions when considering its liquidity and when making future commitments.

Harvard also makes assumptions about inflows from alumni donations.

The model likely did not predict a decline in liquidity events from private equity, real estate, and venture capital and the dramatic decline in donations. That is likely why Harvard announced this recent bond offering, which is being done in a substantially higher interest rate environment than where the funds could have been raised a couple of years ago.

It would be interesting to understand how much the modeled cash flows have declined since original expectations.

I wouldn't be surprised to see Harvard announce a substantial cost reduction program soon.

I suspect that alumni donations won't be coming back for some time. At a minimum, alumni will want to know who the next president is, and the status of DEI and antisemitism on campus before resuming donations.

Besides Harvard tapping the muni market for financing, Princeton University sold bonds earlier this month and is selling more debt this week. 

So what's next for Harvard? Is a "substantial cost reduction program" in the works and could be announced soon as Ackman suggested?