In this article, we discuss the top 10 stock picks of Yale University.
Yale University is one of the richest academic institutions across the world, boasting an endowment value of more than $42 billion at the end of June 2021, up from $31 billion at the end of the second quarter of 2020. The Endowment contains hundreds of different funds that serve a variety of purposes for the university. According to the university, three-quarters of these provide funding for donor-defined purposes. The remaining is used by the Yale Corporation to invest in the stock market.
For the fiscal year that ended on June 30, the university reported a 40% investment return, totaling $12 billion in gains. Matt Mendelsohn, the chief investment officer of Yale, said that although the returns were extraordinary, the investments made by the university represented long-term commitments that aimed to provide stable support to the institution. The investments of the university are made public at the end of each quarter through regulatory filings.
The university made 11 new purchases between March and June this year, sold out of 4 stocks, and made additional purchases in 3. It did not reduce holding in any stock through this period. Some of the top stocks in the portfolio of Yale University include Microsoft Corporation (NASDAQ:MSFT), DocuSign, Inc. (NASDAQ:DOCU), and Lyft, Inc. (NASDAQ:LYFT), among others discussed in detail below. Investors who are eager to replicate the success of the university at the stock market should comb over their portfolio in detail to pick winners.
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Our Methodology
Here is our list of the top 10 stock picks of Yale University. These were picked from the investment portfolio of the university at the end of the second quarter of 2021. We compiled the list of stocks by analyzing the data of over 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Yale University Stock Portfolio: Top Picks
10. Douglas Emmett, Inc. (NYSE:DEI)
Number of Hedge Fund Holders: 19
Last month, investment advisory Piper Sandler raised the price target on Douglas Emmett, Inc. (NYSE:DEI) stock to $42 from $40, reiterating an Overweight rating and underlining that tenant demand in shopping centers, a core holding of the firm, remained unabashed. In addition to shopping centers, Douglas Emmett also invests in office spaces along the Los Angeles coastline. This has provided the firm with a solid foundation. On September 10, it declared a quarterly dividend of $0.28 per share, in line with previous. The forward yield was 3.45%.
According to the latest filings, Yale University owned 10,500 shares in Douglas Emmett, Inc. worth over $353,000 at the end of the second quarter of 2021, representing 0.13% of the portfolio.
At the end of the second quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $360 million in Douglas Emmett, Inc., up from 14 in the preceding quarter worth $337 million.
9. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 21
Upstart Holdings, Inc. (NASDAQ:UPST) recently announced that it would be partnering with Abound Credit Union in Kentucky to improve digital lending for the youth and adults. As part of the new partnership, artificial intelligence systems will be deployed for the loan process. Prominent finance personality Jim Cramer has also recently touted the power of neo banks in the digital economy, backing firms like Upstart to climb higher in the coming weeks and months as more businesses go digital.
According to the latest data, Yale University owned 5,250 shares in Upstart Holdings, Inc. at the end of June 2021 worth more than $655,000, representing 0.23% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Third Point is a leading shareholder in Upstart Holdings, Inc. with 13.3 million shares worth more than $1.6 billion.
In addition to Microsoft Corporation, DocuSign, Inc., and Lyft, Inc., Upstart Holdings, Inc. is one of the stocks that institutional investors are buying.
In its Q2 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
8. RAPT Therapeutics, Inc. (NASDAQ:RAPT)
Number of Hedge Fund Holders: 21
RAPT Therapeutics, Inc. (NASDAQ:RAPT) is a biotech company that has solid business fundamentals, a trait not particularly common with clinical-stage biotech firms. The impressive drug pipeline of the firm is one reason behind this. In late September, the firm announced positive topline results from Phase 1 trials of RPT193, a therapy for patients with atopic dermatitis. The company also beat market expectations on earnings per share and revenue in the second quarter.
Securities filings reveal that Yale University owned 16,000 shares in RAPT Therapeutics, Inc. at the end of the second quarter of 2021 worth over $512,000, representing 0.18% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Perceptive Advisors is a leading shareholder in RAPT Therapeutics, Inc. with 2.4 million shares worth more than $78 million.
7. Asana, Inc. (NYSE:ASAN)
Number of Hedge Fund Holders: 22
In early September, Asana, Inc. (NYSE:ASAN) reported earnings for the second quarter, posting earnings per share of -$0.23, beating predictions by $0.03. The revenue over the period was $89 million, beating estimates by $7 million. The share price of the firm jumped by more than 4% following the earnings beats. KeyBanc recently raised the price target on the stock to $143 from $85 and maintained an Overweight rating, underlining that there was confidence in the ability of the firm to deliver enterprise-focused solutions.
Regulatory filings show that Yale University owned more than 85,000 shares in Asana, Inc. at the end of June 2021 worth $5.32 million, representing 1.90% of the portfolio.
At the end of the second quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $592 million in Asana, Inc., the same as in the preceding quarter worth $374 million.
6. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN)
Number of Hedge Fund Holders: 27
Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is a biopharmaceutical company based in Connecticut. It mostly focuses on developing treatments for neurological and other rare disorders. The firm recently announced the enrollment of the first patient in a trial for BHV-1100, a drug under development for the treatment of multiple myeloma. HC Wainwright has a Buy rating on the stock with a price target of $160.
Yale University owned more than 11,600 shares in Biohaven Pharmaceutical Holding Company Ltd. at the end of the second quarter of 2021 worth over 1.13 million, representing 0.41% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Biohaven Pharmaceutical Holding Company Ltd. with 2.7 million shares worth more than $265 million.
Microsoft Corporation, DocuSign, Inc., and Lyft, Inc. are some of the elite stocks to buy right now, just like Biohaven Pharmaceutical Holding Company Ltd..
In its Q1 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) was one of them. Here is what the fund said:
“Biohaven Pharmaceutical Holding Company Ltd. is a biotechnology company dedicated to neurologic drug discovery. It launched its lead asset, migraine medication Nurtec, last year, and the company is transitioning towards profitability. Shares declined when Biohaven issued a secondary offering in March that took investors by surprise and seemed early in relation to an expected second indication for Nurtec in the prophylactic prevention of migraine, which expands its market. We exited our position.”
5. Stitch Fix, Inc. (NASDAQ:SFIX)
Number of Hedge Fund Holders: 35
On September 21, Stitch Fix, Inc. (NASDAQ:SFIX) posted earnings for the fourth fiscal quarter, reporting earnings per share of $0.19, beating estimates by $0.31. The revenue over the period was $570 million, up 28% year-on-year and beating predictions by $23 million. The share price soared by over 14% following the announcement of the results. The company has benefited from the change in shopping trends and the shift towards digital in the past year and a half.
According to the latest filings, Yale University owned over 55,000 shares in Stitch Fix, Inc. at the end of June 2021 worth $3.36 million, representing 1.20% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Stitch Fix, Inc. with 2.6 million shares worth more than $160 million.
In its Q2 2021 investor letter, RGA Investment Advisors LLC, an asset management firm, highlighted a few stocks and Stitch Fix, Inc. (NASDAQ:SFIX) was one of them. Here is what the fund said:
“We purchased a new position–Stitch Fix–which is attacking this problem of abundance and the friction of shopping digitally head on with curation and personalization.
Your Own Personal Clothing Store
Stitch Fix is incredibly interesting. Founded by Katrina Lake in 2011, Stitch Fix turned apparel shopping into a delightfully personalized, subscription-based platform. The company collects numerous data points when onboarding a customer from the generics and quirks of each individual’s size and shape to tastes in designers, colors and styles. This empowers the company’s stylists to curate a “fix” with five clothing items on a periodic cadence (monthly, quarterly, semi-annually, etc.) of the customer’s choosing. A box arrives with its contents formerly unseen by the customer, with the constant being each item is already a known fit based on the size and shape of the customer’s body type and the trove of data Stitch Fix has on other “look alikes” across their customer base. Of the 5 items, a customer can keep all or none, but they must pay $20 irrespective of whether they keep anything. After reviewing the items, a customer can keep all items (for which they would get a 25% keep five discount) or return some items and checkout online to pay full price.
We owe immense gratitude to Mario Cibelli for helping us think through this company the right way (Mario covered the company in depth with Elliot on a recent episode of This Week In Intelligent Investing).
It is a company we first analyzed and found interesting heading into IPO, deploying the same customer lifetime value framework that led us into our Roku position early. Stitch Fix was intriguing and challenging through this lens, because churn is high in the measurable data, making the CLTV of each individual customer very sensitive to small changes in churn. Mario insisted the more appropriate way to think about this company is comparing them to a retailer like Nordstrom. People start their journey with Stitch Fix, buy a bunch of clothes over several months and then shut off the subscription once a satisfactory portion of their wardrobe has been replenished. Customers reengage once another round of refreshment is needed, but while some churn is the bad kind, not all fits that mold…” (Click here to see the full text)
4. Progyny, Inc. (NASDAQ:PGNY)
Number of Hedge Fund Holders: 39
Progyny, Inc. (NASDAQ:PGNY) is a benefits management firm that focuses on fertility and family building benefits. Berenberg recently initiated coverage of the stock with a Buy rating and a price target of $81, implying upside potential of close to 46%. Analyst Iris Zhilin noted that the firm had already established a reputation in the health industry and was set to benefit from the growth of the fertility market in the US because of delayed parenthoods and the increase in demand for egg freezing.
According to the latest data, Yale University owned more than 26,000 shares in Progyny, Inc. at the end of the second quarter of 2021 worth $1.57 million, representing 0.56% of the portfolio.
At the end of the second quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $290 million in Progyny, Inc., up from 26 in the previous quarter worth $221 million.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Progyny, Inc. (NASDAQ:PGNY) was one of them. Here is what the fund said:
“Two additional names in the health care sector in the quarter, partially funded with a sale, made strong contributions and helped push our relative exposure to the sector from underweight to overweight. We also added Progyny, a leading provider of fertility benefit management services to self-insured employers. This is an increasingly important, albeit relatively underpenetrated benefit for employers, particularly those seeking to improve access and support diversity, inclusion and equity initiatives.
Progyny realizes substantially better outcomes for patients (higher pregnancy rates, lower miscarriage rates and lower twins rates), which leads to significant cost savings for payers along with the obvious better outcomes for patients and families.
Progyny’s mission is to improve the employee experience around fertility issues in order to aid clients in employee recruitment and retention. The company offers a rare win-win-win for employers, employees and health systems, with clear savings and quality improvements. With the company still relatively underpenetrated in its total addressable market and with logical adjacencies (labs/diagnostics, return-to-work support) and demographic tailwinds (families getting started later leads to higher infertility risk), Progyny should sustain its elevated top-line growth profile.”
3. Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge Fund Holders: 43
Lyft, Inc. is one of the most prominent stocks in the Yale portfolio. The company owns and runs a ride-sharing marketplace. Investment bank Goldman Sachs recently initiated coverage of the stock with a Buy rating and a price target of $64. Eric Sheridan, an analyst at the bank, highlighted that the firm was a “pure play” as a disruptor in the transport industry but the delivery aspect of the business was still “a work in progress”.
Securities filings show that Yale University owned over 59,000 shares in Lyft, Inc. at the end of June 2021 worth $3.5 million, representing 1.28% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Alkeon Capital Management is a leading shareholder in Lyft, Inc. with 4.7 million shares worth more than $286 million.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Lyft, Inc. (NASDAQ:LYFT) was one of them. Here is what the fund said:
“New purchase Lyft, the No. 2 U.S. rideshare operator, is exclusively focused on the secular growth opportunity in the rideshare market and stands to be a direct economic reopening beneficiary. The company made tremendous progress on margins during 2020 and improved its ability to meet long-term targets. Lyft is also leveraged to the eventual transition to autonomous driving.”
2. DocuSign, Inc. (NASDAQ:DOCU)
Number of Hedge Fund Holders: 58
The growth of the cloud market has emerged as a dominant theme within the tech world in the past few years. Yale University understands this and has thus invested a lot of money in DocuSign, Inc., a cloud software provider based in California. The company recently partnered with Salesforce to develop new joint solutions that will help automate the contract process between different businesses. Artificial intelligence and new smart tech will be deployed for the purpose.
Regulatory filings reveal that Yale University owned over 13,300 shares in DocuSign, Inc. worth more than $3.7 million at the end of the second quarter of 2021, representing 1.33% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in DocuSign, Inc. with 7.2 million shares worth more than $2 billion.
In its Q2 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and DocuSign, Inc. (NASDAQ:DOCU) was one of them. Here is what the fund said:
“DocuSign provides electronic signature solutions. The firm reported an excellent quarter and investors have appreciated the strong growth combined with the excellent margins the company has posted. DocuSign has a long runway of growth ahead and we believe that it remains in a favorable position to continue gaining market share from traditional manual and paper-based signature solutions.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 238
Microsoft Corporation is perhaps one of the most recognizable brands in the world. Although the Yale stake in the firm is not a large one compared to their overall portfolio, it nonetheless represents the trust that the institution places in the company. Most investment advisors are bullish on Microsoft as the cloud and software market grow by leaps and bounds. Morgan Stanley has an Overweight rating on the shares with a price target of $364.
Yale University owned more than 407 shares in Microsoft Corporation worth $110,000 at the end of June 2021, representing 0.04% of the portfolio.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation with 24.8 million shares worth more than $6.7 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
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This article is originally published at Insider Monkey.
