Everyone suspected it, but no one said it.

That is, until last Tuesday, when Kenneth J. Arrow, Conant University Professor, released a letter stating that the ACSR had overestimated both the short-and long-term costs of divesting of all stocks in companies having a minority of their operations in South Africa (MOSAs).

In its report, the ACSR concluded Harvard could lose 1.5 to 5 per cent of the value of the stocks it was selling just because of the impact the sales would have on the market. It estimated the potential losses at between $4.7 and $15.7 million.

But Arrow said the negative response of the market would not be so great as the ACSR predicted. "Since Harvard is only a very small part of the market, it is extremely unlikely that if the University sells its stock over a long period of time there would be an effect on the price of stock," he said yesterday.

The ACSR also concluded that Harvard's portfolio management practices result in a return that is 2 per cent higher than the average return on common stocks. Because 46 per cent of Harvard's stocks are in MOSA companies, exclusion of those corporations as possible investments would lead to an annual 46-per-cent reduction in the increased dividends, the committee stated. That, in addition to an expected drop in donations of securities, would result in estimated losses of $4.8 to 9.8 million annually.

The low figure may be accurate, but the high figure is "distinctly too high," Arrow said yesterday, adding "something is funny with" the ACSR's conclusion, based on studies by Stanford and Princeton, that MOSA stocks yield higher returns.

Although Arrow examined the ACSR's estimates at the request of the Southern Africa Solidarity Committee, he said yesterday, "I am not really inclined to favor divestiture on a large scale." Regardless of Arrow's personal convictions, his letter has convinced many that divestiture may be far less expensive than the ACSR said.