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Harvard Management Company’s Stock Picks Trail the Broader Market

Harvard Management Company is an asset management firm operated by Harvard University to manage its over $37 billion endowment. Since 2015, the firm has been headed by Stephen Blyth, who has been working at Harvard Management Company since 2006. Apart from being the CEO and president of Harvard Management Company, Mr. Blyth also teaches quantitative finance at Harvard University. According to the firm’s last submitted 13F filing, its US equity portfolio at the end of December was worth $1.03 billion or less than 3% money it oversees and consisted of 158 open equity positions. To know how well the firm’s stock picks are performing in 2016, we at Insider Monkey did an analysis of Harvard Management Company’s 13F holdings in companies worth at least $1 billion and found that the 80 long positions held by the fund delivered a weighted average loss of 0.8% in the first quarter of 2016, which was slightly below the returns generated by the broader market during the same period. In this article, we are going to analyze the performance of its top two holdings while entering 2016 along with the performance of three companies in which it made interesting moves during the fourth quarter.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

Jane Mendillo
Jane Mendillo
Harvard Management Co

First, let’s discuss Chinese search giant Baidu Inc (ADR) (NASDAQ:BIDU), in which Harvard Management Company initiated a stake during the fourth quarter by purchasing 88,078 shares. Another fund that initiated a stake in Baidu Inc (ADR) (NASDAQ:BIDU) during the same period was Jonathan Auerbach‘s Hound Partners, which bought 1.07 million shares of the company. Amid a slump in Chinese equities at the beginning of 2016, Baidu Inc (ADR) (NASDAQ:BIDU)’s stock also plummeted. However, it managed a swift recovery during the second-half of the first quarter and ended the quarter with marginal gains. Last month, the Wall Street Journal reported that the company will be testing its driverless cars in the US and plans to launch a commercially viable model by 2018. The company is expected to report its first-quarter results by the end of this month and the consensus among analysts is for it to report EPS of $6.24 on revenue of $15.76 billion. For the same quarter of the previous financial year, Baidu Inc had reported EPS of $6.76 on revenue of $12.72 billion.

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