February 27, 2006
What has school education got to do with Hedge Funds?
If you thought that school education has nothing to do with hedge funds, think again. Hedge-fund guru Joel Greenblatt applied Wall Street principles to an elementary school and won. P.S. 65Q was a small, struggling elementary school in working-class Ozone Park, Queens for quite some time.
It had opened some years back with the prime objective of providing education to children of extremely poor South American and South Asian immigrants. The school building itself was a former airplane-parts factory. The problem that the school was facing was that though it has over 540 students, they could not perform well in maths. In fact they could not even read properly. This situation was primarily due to lack of funds.
Greenblatt approached the school and after having a good look at the facilities asked the school to put up a figure that they would need. He wanted to accomplish a turnaround in education and learning level. The school authorities did their home work and put forth a proposal which was very much in line with what Greenblatt has thought they would need. They put forth a requirement of $1000 per student per year for 5 years in order to bring about the desired changes. This roughly translated into $ 2.5 million.
The hedge fund manager wanted to create an effective and affordable public-school prototype that could be franchised citywide. And this he did in a short timeframe of 5 years. In this period the school was able to turn around in a way that the genius had predicted. NY Metro reports:
“For weeks, Nelson fretted over how much to request. Finally, she decided to take Greenblatt at his word: To keep everyone from falling behind, she calculated, it would take an incremental $1,000 per student per year for five years, or $2.5 million”
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