Harvard’s Top Stock Picks

Harvard Management filed its 13F earlier this month, reporting many of its long equity positions as of the end of September. Many of the endowment’s holdings are not reported on the 13F (see previous filings from Harvard Management), and as with many other institutions a good deal of investments are managed by other funds. In addition, some large positions are in exchange-traded funds which give the endowment exposure to a particular desired country or industry. Here are five of the largest stock positions that Harvard Management did report:

Jane Mendillo

Mendillo and her team held their position of 2.6 million shares in Pebblebrook Hotel Trust (NYSE:PEB), a real estate investment trust that owns hotel properties including the Doubletree hotel and conference facility in Bethesda. Its dividend yield of 2.4% is low for an REIT, and its $77 million of operating cash flow on a trailing basis (earnings are generally not very useful in evaluating an REIT) compares with a $1.2 billion market cap. We don’t have much experience evaluating REITs and so we would pass, but investors with more familiarity may appreciate learning about Harvard’s stake here.

Kenexa Corporation (NYSE:KNXA) was another top pick with Harvard Management reporting ownership of 1 million shares at the end of September. Kenexa is an HR management software company whose products help businesses with their recruiting and other functions. Its stock is very sensitive to the overall market, with a beta of 2.8; the stock had been doing well this year even before the company received a buyout offer from IBM in August. At a current price of $45.90 and the transaction set to close at $46 per share, there may not be much room here for a retail investor to get involved. We noted in preparing this analysis that many of Harvard’s top picks as of the end of September were acquisition targets, including some that had closed this quarter. Read more about why large investors like merger arb investments.

The endowment owned about 980,000 shares of $90 billion market cap telecom company America Movil SAB de CV (NYSE:AMX) at the end of September. America Movil is an interesting find: its revenue was up slightly in the third quarter versus the same period in 2011, and higher margins drove net income up 67%. Yet its multiples look appealing: the stock trades at 13 times trailing earnings and 11 times forward earnings estimates. Carlos Slim’s top holding looks like it could be a good value. Tiger Cub John Griffin’s Blue Ridge Capital initiated a position of 4.6 million shares during the second quarter.

Harvard Management reported owning 3 million shares of Hudson City Bancorp, Inc. (NASDAQ:HCBK), a $4 billion market cap retail bank holding company. Hudson City reported poor results last quarter, with revenue and earnings falling at double-digit rates from their levels in the third quarter of 2011. At a 4% dividend yield it might be considered an income stock but we’d warn that dividend payments were essentially cut in half in early 2011. It does trade at a discount to book value, but so do many other more prosperous and larger banks; investors interested in financials might want to look elsewhere.

Another takeover target in the endowment’s portfolio was AMERIGROUP Corporation (NYSE:AGP), which is scheduled to be acquired by fellow health insurance company WellPoint in Q1 2013 at about $92 per share (the current price is $91.40). Its trailing P/E multiple is 36, which would be quite high if the transaction does not close for some reason. If it does close then it’s possible that a highly leveraged investor could earn a small positive return on an investment, but as with Kenexa the economics probably would not work for most retail players.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!