The report focuses on Highfields, a hedge fund that manages some of Harvard’s $18 billion endowment and profited from Enron’s collapse.

Highfields, an investment firm started by Richard Grubman and former Harvard Management Company (HMC) investor Jonathan S. Jacobson, received an initial investment of $500 million from the University.

The HarvardWatch report cites SEC filings that show Highfields placed put options on 1.2 million shares of Enron stock during the second quarter—April through June—of 2001 and continued to buy more put options throughout the third quarter.

A put option is a bet that a stock will decline in value. If the stock rises or remains at the same price, the buyer loses the money spent to buy the puts.

But for each dollar the stock drops in value, the buyer makes a dollar. With Enron stock now virtually worthless, Highfields could have profited greatly from Enron’s collapse, members of Harv ardWatch said.

“Our most recent estimate is that Highfields gained $33 to $104 million,” said HarvardWatch and PSLM member Molly E. McOwen ’02.

The HarvardWatch report calls for the University to launch an investigation into whether Winokur—who worked with Jacobson for two years as a director of HMC—leaked information to Jacobson about Enron’s impending demise.

Pending an investigation, the report asks that Winokur be suspended from the Corporation.

HarvardWatch staged a protest outside the Harvard Faculty Club yesterday, chanting, “We don’t need no Enron thug, Harvard give the boot to Pug.”

According to its report, HarvardWatch estimates that University money composes $2 billion of the approximately $5 billon Highfields invests. This assumption would mean that Harvard would come out $12 to $40 million ahead following Enron’s collapse.

But the report acknowledges the figures are all “estimated.”

And an HMC source who refused to be identified said that Harvard invests close to $1 billion with Highfields—not the $2 billion HarvardWatch had claimed.

If true, this would cut in half HarvardWatch’s estimate of the University’s potential gain.

The University’s potential earnings from Enron’s collapse also could have been negated by the money HMC lost on investments in Enron.

Documents filed with the SEC yesterday show that HMC lost at least $10 million and as much as $18 million due to Enron’s collapse.

The HarvardWatch report’s claims of possible insider trading are unrealistic, said Samuel L. Hayes, who is Schiff professor of investment banking at Harvard Business School professor.

Winokur could not be reached for comment yesterday.

—Staff writer Joseph P. Flood can be reached at flood@fas.harvard.edu.