There was a story posted recently on BBC news about a school profiting $24 million from the Snapchat IPO. Its a nice uplifting story as its assumed the school will be able to invest in lots of new facilities which will benefit all the kids studying there. I’d assume the headmaster and some of the higher ups might also give themselves a nice bonus, but who can argue with giving them 1% of that amount?
Here’s the article if anyone wants to read it : http://www.bbc.co.uk/news/technology-39149603
It got me thinking : Why does a school own any stocks at all?
The article doesn’t make clear where the schools investment fund got its capital from in the first place but if it was the taxpayers money then shouldn’t it have gone into educational materials in the first place? Investing in start up tech companies is very risky. statistically it was more likely that the investment would go bust instead of showing this much profit. Would that have resulted in a year of students with no textbooks or pens?
The way the fund is investing in individual stocks instead of funds suggests that the headmaster and friends fancy themselves as savvy investors, it would be interesting to see if he also invested his own money into Snapchat or only took the gamble because it wasn’t his money on the line? If his bet wins he gets a bonus, if it fails would be just blame it on a bad economic climate and forget about it?
in the UK I’m aware that many universities have an investment fund that they use to invest on the stock market. However universities here are run more like businesses and rely on profit generated by their research and business activities. Should a high school be under the same pressure to “earn” its money?
I understand I don’t know all the facts about this situation and am happy to change my mind if anyone knows more details about this particular school and how its accounts are run. As it stands I’m not comfortable with the idea of a headmaster gambling away tax payers money on what he feels are good investments.