We recently compiled a list of the Harvard University Stock Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Samsara Inc. (NYSE:IOT) stands against Harvard University’s other stock picks.

When it comes to college prestige, Ivy League institutions lead the rankings. For an investment that can approach $60,000 per year in tuition and fees as of the 2022-2023 academic year, these schools promise an elite education and promising career prospects post-graduation. Although opinions may vary on which Ivy League school offers the best education, there’s no debate over which has the largest endowment. Harvard University’s endowment stands at an impressive $53.2 billion, bolstered by generous donations and strategic investments managed by the Harvard Management Company (HMC).

Founded in 1974, Harvard Management Company provides a dedicated funding stream that supports the university’s teaching and research, contributing over one-third of Harvard’s annual operating budget. In fiscal year 2024, Harvard’s endowment distributions totaled $2.4 billion, representing 37% of the university’s annual revenue. These funds supported key areas such as financial aid, faculty, and research initiatives. The university allocated $749 million toward financial aid across its schools, including $250 million for undergraduates. Harvard’s endowment portfolio is heavily weighted toward private equity and hedge funds, with private equity comprising 39% of the portfolio and hedge funds making up 32%.

According to Harvard Management Company CEO N.P. “Narv” Narvekar, the endowment targets an 8% return, and its seven-year annualized return of 9.3% has exceeded that goal. This performance currently places it mid-tier among Ivy League and other elite institutions. While its fiscal year 2024 return did not match Columbia’s 11.5% or Brown’s 11.3%, it outpaced those of MIT, Cornell, Dartmouth, and the University of Pennsylvania. Despite fiscal year 2024 being a strong period for public equities, with the S&P 500 frequently hitting record highs, Narvekar states that HMC’s strategy of lower public equity exposure still delivered robust returns:

“In FY24, public equity and hedge fund portfolios stood out for their strong performance. This is a particularly positive indicator, since HMC’s hedge fund portfolio has less equity exposure than most hedge fund indices, yet still outperformed during a strong year for equities.”

Notably, HMC significantly reduced the endowment’s exposure to real estate and natural resources, scaling it down from 25% in 2018 to just 6% in fiscal year 2024. This strategic shift has contributed positively to the endowment’s overall returns. Large-cap technology equities, particularly in the IT sector, may have also boosted returns for the fund. Michael Markov, founder of Markov Processes International, suggested that Harvard likely benefitted from “overweighting IT and the Mag 7 relative to the broad S&P 500.” Markov considers fiscal year 2024 a success for Harvard and a testament to HMC CEO Narvekar’s strategy of overhauling the university’s complex portfolio during his seven-year tenure.

Our Methodology

For this analysis, we examined Harvard Management Company’s stock portfolio from the third quarter of 2024. The stocks are ranked based on the firm’s stake value in each holding.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Samsara Inc. (NYSE:IOT)

Harvard Management Company’s Stake: $21.17 million

Samsara Inc. (NYSE:IOT) provides a cloud-based software platform specializing in commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its offerings include real-time GPS tracking, AI-powered dash cams, routing tools, and driver apps.

In Q2 FY2025, Samsara Inc. (NYSE:IOT) reported a 36% year-over-year increase in annual recurring revenue (ARR), reaching $1.264 billion. This performance was driven by the addition of 169 new customers generating over $100,000 in ARR and a record 14 customers contributing over $1 million each.

On October 11, TD Cowen raised its price target for Samsara Inc. (NYSE:IOT) stock from $46 to $56 while reaffirming a Buy rating. The update reflects confidence in Samsara’s strong momentum in acquiring multi-product customers and its potential for sustained growth.

In addition, Samsara Inc. (NYSE:IOT) has introduced the Asset Tag, an industrial-grade Bluetooth tracking device for small assets. Designed to improve asset utilization, prevent loss, and enhance worker efficiency, Asset Tag contributed $1 million in new annual contract value during the quarter.

Baron Opportunity Fund stated the following regarding Samsara Inc. (NYSE:IOT) in its Q2 2024 investor letter:

“We initiated a position in Samsara Inc. (NYSE:IOT) during the quarter. Samsara provides a cloud software platform for commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its software collects and analyzes data from sensors and cameras installed in its customers’ commercial trucks, construction equipment, warehouses, and other assets, helping companies visualize and improve the state of their operations. More than 17,500 customers in the transportation, field services, construction, utilities, and other industries have adopted Samsara, and last year the company became one of the fastest software companies ever to reach $1 billion in annual recurring revenue (ARR). Samsara has been winning share from competitors in the $51 billion connected fleet software market due to its superior cloud native architecture, ability to address multiple use cases in a single platform, and its rapid product release cycle. As Samsara continues to expand its connected asset base, it is building an unmatched data asset that it is using to drive better outcomes for its customers. Capturing more than 9 trillion data points from over 44 billion hours of camera footage across millions of miles driven, Samsara uses AI to help companies optimize their vehicle routes, prevent accidents, improve asset utilization, reduce fuel expenses, and lower insurance premiums. In 2023, across its customer base, the company prevented 200,000 accidents and reduced carbon emissions by 2.3 billion pounds. We see a long runway for growth as Samsara expands in existing accounts and wins new logos. Samsara is less than 50% penetrated in its existing customers’ vehicle fleets and has a significant opportunity to cross-sell newer non-vehicle products (which already account for $125 million of ARR) into its base. The company has also increased its customer count by more than 20% year-over-year every quarter and identified hundreds of thousands of potential new accounts to win. As it has scaled, Samsara has delivered healthy operating leverage, and we think free cash flow margins can ultimately expand beyond 20% longer term.”

Overall IOT ranks 10th on Harvard University’s list of top stock picks. While we acknowledge the potential of IOT as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IOT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.