Putnam's imprimatur is clearly evident in the makeup of the company--four of the original 10 partners came from Putnam Management, including Cabot, who got his seven year apprenticeship there after graduating from the Business School 1959. He then left Putnam for a seven year stint at the Wellington Management Company as senior investment officer and managing director.

Cabot says that while Putnam's day-to-day role at HMC has never been substantial and has further dwindled as his retirement draws near, as chairman of the company's board, "he was always available to me in terms of if I wanted to try new strategies or had personnel questions. He was a sounding board for me, and he had a response much more of an oversight role as contrasted to any day-to-day decision making."

But, Cabot adds, "there have been from time to time particular investments where I have sought out a little more than his advice--kind of his O.K." Those moves include certain real estate deals and Harvard's entrance into venture capital.

Perhaps the most important new ingredient in the management recipe during Cabot's tenure has been growing concern about Harvard's $440 million of investments in companies that do business in South Africa, and investments in companies that make components of nuclear weapons.

While reluctant to detail his own criticisms of divestiture as a means of changing companies' behavior, Cabot says he would be hamstrung if Harvard imposed a ban on South Africa-related investments.

"No company is sort of 100 percent a bad company," he says. "No company is even 50 percent a bad company, and that's the issue you run into with most corporations. What do you do with a company that's 90 percent good and 10 percent bad? Where do you draw the line?"

"My attitude in life is that it's a very imperfect world, and I don't see that it's Harvard's role to be overly moralist," Cabot says, adding that the more Harvard is confined in terms of what companies it can invest in, the lower he feels return on endowment will be--and the less money for scholarships, faculty salaries, and construction there will be.

But Cabot also says he, feels moral considerations should be an issue in investing. "Good, clean managements and management practices will make better companies and better stocks. I guess I bring my own value orientation into the process," he explains.

For instance, Harvard does not invest in combing companies, Cabot says, mostly because he says he doesn't understand them as investments and since "I guess I also have some attitude above gambling companies."

Because of Harvard's prestige, and nobel concern about what happens to the gifts they make to the University, Harvard Management Company's moves have always borne more scrutiny than those of other schools. And money managers around the country voice general approval of the company, with only some reservations.

"My impression is that they do a very good job and have a very first-class reputation," says John Q. Adams '45, a manager with the John Hanccoi Life Insurance Company. "Harvard has never had influential groups complaining about its excellent performance--my impression is that it's exactly the opposite."

"It's a very effectively run enterprise," agrees Robert A. Lawrence, a State Street manager who has served on Wellesley College's board of trustees along with Cabot and Putnam. "It's made a lot of sense for Harvard, because Harvard's endowment is so large that the expense for an in-house management company makes it very competitive."

BU's Doyle says that while "their people are very good, the disadvantage is that it doesn't suffer from competition. There's always an advantage to having clients that choose you because you're the best there is."

While HMC is a "captive" organization, in that it only serves one customer, Cabot says Harvard likes to keep some money out of the system to keep HMC's wits sharp. And at just over $6 million a year, including handsome compensation of more than $250,000 for Cabot, experts say Harvard ends up paying a much lower fee for money management relative to its account than most anyone else.

As to the future, Cabot sees HMC becoming more able to handle new kinds of complex investments, high-pressure and professional. "The whole level of intensity has significantly picked up in this enterprise. I don't want you to infer that we were sort of a country club before, but it's just that the general nature of competition has forced this organization--just like every other one--to hire better people, to focus better people on topics and to push them a little harder," he says.

Cabot says the expansion of HMC to 90 staffers promises, in the long run, more money for Harvard. "We are running our affairs better today, we have a higher level of discussion, than I think we've ever had before. The general level of quality of input can only reflect, hopefully, in better results."