In this article, we discuss the top 10 picks in Harvard University’s stock portfolio.
Harvard’s endowment is Harvard University’s largest financial asset and comprises over 14,000 funds. The endowment is managed by Harvard Management Company (HMC) since 1974, whose main goal is to generate strong long-term results to support the educational and research activities of Harvard University, which derives over 35% of its operating revenue from endowment distributions. Jane Mendillo served as the President and CEO of the hedge fund from 2008 till 2014, when she finally stepped down from her position. In 2016, N.P Narvekar took over as the CEO and President of HMC. As of 2021, HMC manages over $41 billion of the University’s endowment.
Prior to joining HMC, N.P. Narvekar worked as the CEO of Columbia University Investment Management Company from 2002 to 2015. During his tenure, Columbia’s compound annualized rate of return through fiscal 2015 was reported at 10.1%, according to Harvard Magazine. To maximize the performance of HMC, Narvekar transformed two of the fund’s previous Hybrid Models and the Silo Approach of investing. Instead of considering both internal and external managers for investing in Harvard’s endowment portfolio, Narvekar shifted the strategy to rely more on external managers and firms, the policy which is practiced by many other university endowments.
HMC’s annualized rate of return for the period from 2005 to 2015 stood at 7.6%, compared with Columbia’s 10.1% during the same period. The figure declined to 5.7% in 2016, reflecting the losses of investment in one year. However, the shift in the investment policy of Narvekar resulted in HMC gaining 8.1% in 2017, followed by a 10.1% return in 2018 and 6.5% in 2019. According to a report by The Harvard Crimson, in FY20, HMC returned 7.3% on its investment, driving the University’s total endowment value to the largest sum in its history at approximately $42 billion.
Some of the main sectors that Harvard Management Company invests in include technology, healthcare, and financial. As of Q2 2021, the hedge fund has over $1.7 billion in assets under management and the total value of its 13F portfolio grew by 0.97% when compared with the first quarter. Some of the top stocks in the hedge fund’s portfolio include Apple Inc. (NASDAQ:AAPL), Facebook, Inc. (NASDAQ:FB), Scientific Games Corporation (NASDAQ:SGMS), Palo Alto Networks, Inc. (NYSE:PANW), Royalty Pharma plc. (NASDAQ:RPRX), and DaVita Inc. (NYSE:DVA). The top ten holdings represent 79.56% of the hedge fund’s 13F portfolio, as of Q2.
Our Methodology:
Let’s analyze our list of the top picks in Harvard University’s portfolio. We picked these stock from Harvard Management Company’s Q2 portfolio.
Jane Mendillo
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Harvard University Stock Portfolio: Top 10 Picks
10. 10x Genomics, Inc. (NASDAQ:TXG)
Harvard Management Company’s Stake Value: $36,451,000
Percentage of Harvard Management Company’s 13F Portfolio: 2.09%
Number of Hedge Fund Holders: 28
10x Genomics, Inc. (NASDAQ:TXG) is an American biotechnology company that develops integrated systems for whole genome sequencing and single-cell transcriptomics. The company ranks tenth on our list of the top picks in Harvard University’s portfolio.
Harvard Management Company holds 186,143 shares in 10x Genomics, Inc., worth over $36.4 million, as of Q2 2021. The company represents 2.09% of the hedge fund’s 13F portfolio. In Q2, 10x Genomics, Inc. posted a GAAP EPS of -$0.10, beating the estimates by $0.16. The company’s revenue for the quarter stood at $115.8 million, showcasing a 169.9% year-over-year growth. For FY21, 10x Genomics, Inc. lifted its guidance and now expects revenue in the range of $480 million to $500 million versus the estimates of $496.6 million. In August, Citigroup gave a ‘Buy’ rating to 10x Genomics, Inc., with a $24 price target.
As of Q2 2021, 28 hedge funds tracked by Insider Monkey have positions in 10x Genomics, Inc., up from 23 in the previous quarter. The total value of these stakes is over $1.4 billion.
Like Apple Inc., Facebook, Inc., Scientific Games Corporation, Palo Alto Networks, Inc., Royalty Pharma plc. (NASDAQ:RPRX), and DaVita Inc., 10x Genomics, Inc. is gaining investors’ attention in 2021.
9. DaVita Inc. (NYSE:DVA)
Harvard Management Company’s Stake Value: $49,245,000
Percentage of Harvard Management Company’s 13F Portfolio: 2.83%
Number of Hedge Fund Holders: 39
DaVita Inc. is an American healthcare company that works to transform the healthcare delivery systems to improve patients’ lives. The company lays its main focus on kidney care services in the U.S. DaVita Inc. ranks ninth on our list of the top picks in Harvard University’s portfolio.
In Q2 2021, Harvard Management Company started building its positions in DaVita Inc. with 408,912 shares worth over $49.2 million. The company now represents 2.83% of the hedge fund’s portfolio. In the second quarter, DaVita Inc. reported revenue of $2.92 billion, up 1.4% from the prior-year quarter and beating the estimates by $50 million. For FY21, the company expects the adjusted EPS of $8.80-$9.40, versus the estimates of $8.66. In July, Deutsche Bank lifted its price target on DaVita Inc. to $207, with a ‘Buy’ rating on the shares. The firm’s analyst believes that the company has evolved in the past two years and sees a potential upside in its dialysis business.
As of Q2 2021, 39 hedge funds tracked by Insider Monkey have positions in DaVita Inc., compared with 34 in the previous quarter. These stakes are valued at over $5.1 billion. With over 36 million shares, worth $4.3 billion, Warren Buffett’s Berkshire Hathaway is the company’s leading shareholder.
Like Apple Inc., Facebook, Inc., Scientific Games Corporation, Palo Alto Networks, Inc., and Royalty Pharma plc. (NASDAQ:RPRX), DaVita Inc. is one of the top picks in Harvard University’s portfolio.
8. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)
Harvard Management Company’s Stake Value: $55,088,000
Percentage of Harvard Management Company’s 13F Portfolio: 3.16%
Number of Hedge Fund Holders: 15
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) stands eighth on our list of the top picks in Harvard University’s portfolio. It is an American clinical-stage biotechnology company that focuses on drug discovery through digital biology.
Recursion Pharmaceuticals, Inc. is one of the latest acquisitions of Harvard Management Company as the fund bought over 1.5 million shares of the company worth $55.08 million in Q2 2021. The company accounts for 3.16% of the hedge fund’s 13F portfolio. Recently, Berenberg initiated its coverage on Recursion Pharmaceuticals, Inc. with a ‘Buy’ rating and a $37 price target. In Q2 2021, the company reported revenue of $2.55 million, showcasing a 1242% year-over-year growth.
As of Q2 2021, 15 hedge funds tracked by Insider Monkey have positions in Recursion Pharmaceuticals, Inc., worth $451.9 million.
7. Intercontinental Exchange, Inc. (NYSE:ICE)
Harvard Management Company’s Stake Value: $81,731,000
Percentage of Harvard Management Company’s 13F Portfolio: 4.7%
Number of Hedge Fund Holders: 47
Intercontinental Exchange, Inc. (NYSE:ICE) is an American Fortune 500 company that provides services in marketplace infrastructure, data services, and technology to financial institutions, corporations, and government officials. The company ranks seventh on our list of the top picks in Harvard University’s portfolio.
As of Q2 2021, Harvard Management Company owns 688,549 shares of Intercontinental Exchange, Inc., worth $81.7 million. The fund has reduced its stake in the company by 67%.
In August, Morgan Stanley lifted its price target on Intercontinental Exchange, Inc. to $124 with an ‘Equal Weight’ rating on the shares. In the same month, Raymond James also raised its price target on the stock to $140, while keeping a ‘Strong Buy’ rating on the shares.
As of Q2 2021, 47 hedge funds tracked by Insider Monkey have positions in Intercontinental Exchange, Inc., compared with 58 in the previous quarter. The total value of these stakes is nearly $3 billion.
Like Apple Inc., Facebook, Inc., Scientific Games Corporation, Palo Alto Networks, Inc., Royalty Pharma plc. (NASDAQ:RPRX), and DaVita Inc., Intercontinental Exchange, Inc. is one of the top choices of investors and analysts alike in 2021.
Oakmark Funds recently released its second-quarter 2021 investor letter and mentioned Intercontinental Exchange, Inc. in it. Here is what the firm has to say:
“Intercontinental Exchange is one of the largest and, in our view, most successful financial exchange operators in the world. The company was created through a series of shrewd acquisitions executed by their founder and CEO Jeff Sprecher. Sprecher is one of the more capable CEOs we’ve evaluated, having demonstrated a long history of astute capital allocation and a willingness to act and adapt rapidly to new opportunities and competitive threats. Today, Intercontinental Exchange competes in three primary business segments: exchanges, fixed income/data services and mortgage technology. We believe each of these businesses exhibits attractive economic characteristics and that each should grow earnings well in excess of GDP over the long term. Despite this favorable long-term outlook, the company currently trades at a P/E ratio that is roughly in line with the S&P 500. We believe a business with Intercontinental Exchange’s strong competitive position, excellent management team and attractive growth outlook deserves to trade well above a market multiple. We like buying great businesses at average prices and believe Intercontinental Exchange represents a compelling opportunity to do just that.”
6. AbCellera Biologics Inc. (NASDAQ:ABCL)
Harvard Management Company’s Stake Value: $90,312,000
Percentage of Harvard Management Company’s 13F Portfolio: 5.19%
Number of Hedge Fund Holders: 18
AbCellera Biologics Inc. (NASDAQ:ABCL) stands sixth on our list of the top picks in Harvard University’s portfolio. It is a biotechnology company that develops human antibodies to address pandemics and common diseases. The company has headquarters in Vancouver, Canada.
As of Q2 2021, Harvard Management Company owns over 4.1 million shares in AbCellera Biologics Inc., worth $90.3 million. The company represents 5.19% of the hedge fund’s 13F portfolio. Recently, AbCellera Biologics Inc. announced its multi-year and multi-target research collaboration with the biotech behemoth, Moderna, Inc. (NASDAQ:MRNA). The collaboration will strengthen the company’s AI-powered technology for identifying therapeutic antibodies. In Q2 2021, AbCellera Biologics Inc. posted revenue of $27.64 million, showcasing a 146.1% year-over-year growth. In August, Credit Suisse gave an ‘Outperform’ rating to AbCellera Biologics Inc., with a $49 price target.
As of Q2 2021, 18 hedge funds tracked by Insider Monkey have positions in AbCellera Biologics Inc., compared with 20 in the previous quarter. The total value of these stakes is $773.1 million. Baker Bros. Advisors is the company’s largest shareholder with shares worth $229.9 million.
5. Palo Alto Networks, Inc. (NYSE:PANW)
Harvard Management Company’s Stake Value: $91,257,000
Percentage of Harvard Management Company’s 13F Portfolio: 5.25%
Number of Hedge Fund Holders: 69
Palo Alto Networks, Inc. is an American cybersecurity company that provides services in network security, cloud security, and various cloud-delivered security. The company stands fifth on our list of the top picks in Harvard University’s portfolio.
As of Q2 2021, Harvard Management Company holds 245,943 shares in Palo Alto Networks, Inc., worth over $91.2 million. The hedge fund reduced its position by 28% in the company, which now accounts for 5.25% of the fund’s 13F portfolio. Recently, Palo Alto Networks, Inc. announced that it expects to see a 50% growth in its annual revenue due to the increased demand for security services and cloud-based computing systems.
Recently, Deutsche Bank lifted its price target on Palo Alto Networks, Inc. to $560, while keeping a ‘Buy’ rating on the shares.
Of the 873 hedge funds tracked by Insider Monkey, 69 hedge funds have positions in Palo Alto Networks, Inc. in Q2 2021, compared with 64 in the previous quarter. These stakes are valued at $4.7 billion. Viking Global is the largest shareholder of the company with over 2.6 million shares, worth $979.7 million.
4. Facebook, Inc. (NASDAQ:FB)
Harvard Management Company’s Stake Value: $180,620,000
Percentage of Harvard Management Company’s 13F Portfolio: 10.39%
Number of Hedge Fund Holders: 266
Facebook, Inc. ranks fourth on our list of the top picks in Harvard University’s portfolio. It is an American multinational technology company with the main purpose of developing an interconnected world. Facebook, Inc. was founded in 2004 and has headquarters in California, U.S.
As of Q2 2021, Harvard Management Company owns 519,456 shares in Facebook, Inc., worth over $180.6 million.
Recently, Morgan Stanley lifted its price target on Facebook, Inc. to $400, while keeping an ‘Overweight’ rating on the shares.
As of Q2 2021, 266 hedge funds tracked by Insider Monkey have positions in Facebook, Inc., up from 257 in the previous quarter. These stakes are valued at $42.3 billion. Martin Taylor’s Crake Asset Management is the company’s largest shareholder, with shares worth $168.6 billion.
First Eagle Investment Management mentioned Facebook, Inc. in its second-quarter investor letter. Here is what the firm has to say:
“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”
3. Scientific Games Corporation (NASDAQ:SGMS)
Harvard Management Company’s Stake Value: $207,429,000
Percentage of Harvard Management Company’s 13F Portfolio: 11.93%
Number of Hedge Fund Holders: 24
Scientific Games Corporation is an American company that provides gambling products and services to gaming entertainment organizations across the globe. The company ranks third on our list of the top picks in Harvard University’s portfolio.
As of Q2 2021, Harvard Management Company holds over 2.6 million shares in Scientific Games Corporation, worth $207.4 million. The company accounts for 11.93% of the hedge fund’s 13F portfolio. Recently, Scientific Games Corporation announced its advanced lottery instant game technology at its UK facility, which will grow its global production capacity by 20%.
Recently, Craig-Hallum lifted its price target on Scientific Games Corporation to $105, while keeping a ‘Buy’ rating on the shares.
Of the 873 hedge funds tracked by Insider Monkey, 24 funds have positions in Scientific Games Corporation as of Q2 2021, compared with 23 in the previous quarter. The total value of these stakes is over $1.45 billion. With over 9 million shares, worth $704.3 million, Fine Capital Partners is the company’s largest shareholder.
2. Royalty Pharma plc (NASDAQ:RPRX)
Harvard Management Company’s Stake Value: $292,786,000
Percentage of Harvard Management Company’s 13F Portfolio: 16.84%
Number of Hedge Fund Holders: 20
Royalty Pharma plc (NASDAQ:RPRX) stands second on our list of the top picks in Harvard University’s portfolio. The company is the largest buyer of biopharmaceutical royalties and helps fund expensive clinical trials for promising new drugs.
As of Q2 2021, Harvard Management Company owns over 7.1 million shares in Royalty Pharma plc (NASDAQ:RPRX), valued at $292.7 million. The company represents 16.84% of the hedge fund’s 13F portfolio. In Q2 2021, Royalty Pharma plc (NASDAQ:RPRX) reported revenue of $555 million, presenting an 8.6% year-over-year growth and beating the estimates by $64.01 million. In July, Tigress Financial initiated its coverage on Royalty Pharma plc (NASDAQ:RPRX) with a ‘Buy’ rating and a $50 price target. The firm’s analyst Ivan Feinseth appreciated the company’s unique business model which allows investors to participate in royalty streams.
As of Q2 2021, 20 hedge funds tracked by Insider Monkey have positions in Royalty Pharma plc (NASDAQ:RPRX), worth over $1.5 billion. The number of hedge funds having stakes in the company stood at 26 in the previous quarter, with a value of $1.83 billion.
1. Apple Inc. (NASDAQ:AAPL)
Harvard Management Company’s Stake Value: $333,484,000
Percentage of Harvard Management Company’s 13F Portfolio: 19.18%
Number of Hedge Fund Holders: 138
Apple Inc. is an American multinational technology company that deals in consumer electronics, online services, and computer software. Apple Inc. tops our list of the top picks in Harvard University’s portfolio.
In Q2 2021, Harvard Management Company started building its position in Apple Inc., with over 2.4 million shares, worth $333.4 million. The company represents 19.18% of the hedge fund’s 13F portfolio. In Q2 2021, Apple Inc. posted a GAAP EPS of $1.30, beating the estimates by $0.29. The company reported revenue of $81.4 billion, presenting a 36.4% year-over-year growth. iPhone sales accounted for $39.57 billion of the gross revenue, versus the estimates of $34.5 billion. Recently, both Citigroup and Piper Sandler lifted their price targets on Apple Inc. to $170 and $175, respectively.
As of Q2 2021, 138 hedge funds tracked by Insider Monkey have positions in Apple Inc., up from 127 in the previous quarter. These stakes are valued at $145.5 billion. With over 887 million shares, worth $121.5 billion, Berkshire Hathaway is the company’s leading shareholder.
ClearBridge Investments mentioned Apple Inc. in its first-quarter 2021 investor letter. Here is what the firm has to say:
“As we actively manage holdings and position sizes, we look to regularly recycle capital into more compelling opportunities. Maintaining our valuation discipline, we sharply reduced our position in Apple, whose shares more than doubled following our initial purchase in mid-2019 with an earnings multiple rising from the low-to-mid teens to nearly 30x.”
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This article is originally published at Insider Monkey.
