Harvard University Stock Portfolio: Top 10 Picks

Published on November 2, 2022 at 9:54 am by Hamna Asim in Hedge Funds, News

In this article, we discuss the top 10 picks of the Harvard University stock portfolio. If you want to see more stocks in this selection, check out Harvard University Stock Portfolio: Top 5 Picks.

Harvard Management Company was established in 1974 and manages Harvard University’s endowment and financial assets. Over the years, the market-beating performance of Harvard Management Company has contributed billions of dollars to Harvard University. The value of Harvard University’s endowment declined by $2.3 billion in 2022, after Harvard Management Company posted a 1.8% loss on its investments. This marks the first year of negative returns since 2016. This is a distinct contrast to the record-high 33.6% returns that Harvard Management Company reported last year.

Harvard Management Company’s loss is primarily attributed to skyrocketing inflation and high interest rates, which have created havoc in the global financial markets. The endowment underperformed due to “the poor performance of global equity markets”, noted HMC CEO N.P. Narvekar. Overall, the performance of the Harvard University stock portfolio was satisfying relative to the global equity markets. The portfolio was previously managed by Jane Mendillo, and she served as the president and chief executive officer of the endowment before departing from her position in 2014, after 21 years with HMC. She is an American investor, endowment fund manager, and philanthropist.

The endowment contributed $2.1 billion towards the university’s operational budget for the fiscal year 2022, accounting for 36% of the annual revenue. Harvard concluded the fiscal year with a budget surplus of $406 million. Harvard Management Company has delivered upbeat returns historically, which makes it a good idea to follow its investment strategy. Some of the best stocks in the Harvard University stock portfolio include Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM).

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Our Methodology

We used Harvard Management Company’s stock portfolio for the second quarter of 2022 for this analysis. The following stocks are listed according to the firm’s stake value in each holding. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022.

Harvard University Stock Portfolio: Top Picks

10. NVIDIA Corporation (NASDAQ:NVDA)

Harvard Management Company’s Stake Value: $10,061,000

Number of Hedge Fund Holders: 84

NVIDIA Corporation (NASDAQ:NVDA) is a California-based provider of graphics, computing, semiconductors, and networking solutions in the United States, Taiwan, China, and internationally. Harvard Management Company initially invested in NVIDIA Corporation (NASDAQ:NVDA) during the fourth quarter of 2021. In Q2 2022, the hedge fund increased its stake in the firm by 153%, holding 66,368 shares worth over $10 million.

Needham analyst Rajvindra Gill on October 25 maintained a Buy recommendation on NVIDIA Corporation (NASDAQ:NVDA) but lowered the price target on the stock to $155 from $170 as part of a broader research note on Semiconductors and Semiconductor Equipment. Semiconductor stocks will not reach a bottom until Wall Street indicates negative revenue and EPS growth year-over-year in 2023, similar to earlier cycles, the analyst told investors. He noted that market estimates are still reflecting a positive growth rate.

In Q2 2022, NVIDIA Corporation (NASDAQ:NVDA) lost favor with hedge funds. According to Insider Monkey’s data, 84 funds reported owning stakes worth $3.3 billion in NVIDIA Corporation (NASDAQ:NVDA) at the end of June 2022, compared to 102 funds in the prior quarter worth $6.3 billion. Ken Fisher’s Fisher Asset Management held a prominent stake in the company at the end of Q2, comprising 7.6 million shares worth $1.15 billion.

In addition to Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), NVIDIA Corporation (NASDAQ:NVDA) is one of the top stock picks of the Harvard University stock portfolio.

Here is what Baron Fifth Avenue Growth Fund has to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2022 investor letter:

“At the company-specific level, there was a broad correction across the entire portfolio. While four of our holdings contributed to performance, the contribution to absolute returns was less than 100 bps combined, as unfortunately none of them were large enough to move the needle. We had 16 investments detracting over 100 bps each with NVIDIA (NASDAQ:NVDA), our second largest detractor, costing the Fund 254 bps.

NVIDIA’s stock was hit even harder, down 44.4%, impacted by concerns over the health of the consumer, dramatic declines in crypto, and COVID-related lockdowns in China. Despite the sell-off and the increased near-term volatility in its gaming business, NVIDIA’s revenues grew 46% year-over-year with 48% operating margins, driven by continued strength in its data center business as companies across industries adopt AI and ML…” (Click here to see the full text)

9. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)

Harvard Management Company’s Stake Value: $12,285,000

Number of Hedge Fund Holders: 17

Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) was incorporated in 2013 and is headquartered in Salt Lake City, Utah. It operates as a clinical-stage biotechnology company, utilizing biology, chemistry, automation, data science, and engineering to commercialize drug discovery. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) has been part of the Harvard University stock portfolio since Q2 2021. In the second quarter of 2022, the fund owned 1.50 million Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) shares worth $12.2 million, representing 1.42% of the total 13F securities.

On October 25, Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) announced that it has entered into a stock purchase agreement for the sale of approximately 15.3 million units of its common stock in a private placement, led by investment firm Kinnevik AB. Gross proceeds of the private placement are expected to be nearly $150 million, before accounting for agent fees and other expenses to be paid by Recursion. The net proceeds will be utilized for general corporate purposes, including investments in advancing the firm’s current clinical and preclinical programs.

KeyBanc analyst Scott Schoenhaus initiated coverage of Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) on September 15 with an Overweight rating and a $20 price target. The analyst noted that Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is at the “forefront” of an emerging industry, and the company utilizes cloud computing and data science to “disrupt” traditional drug discovery. Four of the company’s drug development programs are in clinical trials, added the analyst.

According to Insider Monkey’s data, 17 hedge funds were long Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) at the end of June 2022, compared to 20 funds in the last quarter. MIC Capital Partners held the biggest stake in the company, consisting of 8.45 million shares worth $68.8 million.

Here is what Lux Capital has to say about Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) in its Q2 2022 investor letter:

“As we discussed before describing “Extensionalism”, one of our theses has been the growing convergence between the biological and technological, the organic and inorganic, man and machine. Lux has made investments in the digitization, technological capture and amplification of each of the human senses. Consider vision and speech: we have technology that can rapidly recognize and label objects from pixels (companies that span defense, biotechnology, manufacturing and transportation like, Recursion (NASDAQ:RXRX), and others that can rapidly generate videos, images, and even more complex language from simple inputs.”

8. Revolution Medicines, Inc. (NASDAQ:RVMD)

Harvard Management Company’s Stake Value: $13,066,000

Number of Hedge Fund Holders: 20

Revolution Medicines, Inc. (NASDAQ:RVMD) is a California-based clinical-stage precision oncology company, focused on developing therapies for RAS-addicted cancers and solid tumors. As per regulatory filings for the second quarter of 2022, the Harvard University stock portfolio featured 670,382 shares of Revolution Medicines, Inc. (NASDAQ:RVMD), worth over $13 million and representing 1.51% of the total holdings. The hedge fund has held a position in the firm since Q1 2020.

On October 20, Oppenheimer analyst Jay Olson initiated coverage of Revolution Medicines, Inc. (NASDAQ:RVMD) with an Outperform rating and a $30 price target. The “pioneering oncology company” has a “potentially best-in-class” KRASG12C inhibitor candidate, RMC-6291, and later-stage RMC-4630, the analyst told investors. He believes Revolution Medicines, Inc. (NASDAQ:RVMD)’s approach is unique as compared to Amgen Inc. (NASDAQ:AMGN) and Mirati Therapeutics, Inc. (NASDAQ:MRTX). The analyst added that Revolution Medicines, Inc. (NASDAQ:RVMD)’s inhibitors “could avoid certain limitations”.

Among the hedge funds tracked by Insider Monkey, 20 funds reported owning stakes worth $370 million in Revolution Medicines, Inc. (NASDAQ:RVMD) at the end of June 2022, compared to 19 funds in the prior quarter worth $410.4 million. Oleg Nodelman’s EcoR1 Capital is the biggest position holder in the company, with 4.2 million shares valued at $83.3 million.

7. Grab Holdings Limited (NASDAQ:GRAB)

Harvard Management Company’s Stake Value: $13,586,000

Number of Hedge Fund Holders: 25

Grab Holdings Limited (NASDAQ:GRAB) is a Singapore-based company providing mobility, delivery, financial services, and enterprise offerings through its mobile application in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The company reported at the end of September that it expects to breakeven on its adjusted EBITDA by the second half of 2024 as it moves towards profitability.

Securities filings for Q2 2022 reveal that the Harvard University stock portfolio had 5.36 million shares of Grab Holdings Limited (NASDAQ:GRAB), worth $13.5 million and representing 1.57% of the total holdings. The hedge fund strengthened its hold on the stock by 46% in the June quarter.

Barclays analyst Jiong Shao on October 10 assumed coverage of Grab Holdings Limited (NASDAQ:GRAB) with an Equal Weight rating and a $3 price target. As a market leader in food delivery and ride-hailing in Southeast Asia, Grab Holdings Limited (NASDAQ:GRAB) has a “very strong competitive position,” the analyst wrote in a research note. However, the analyst remains skeptical whether these businesses “can thrive longer term in the region.”

According to Insider Monkey’s data, 25 hedge funds were long Grab Holdings Limited (NASDAQ:GRAB) at the end of June 2022, compared to 27 funds in the last quarter. Brett Barakett’s Tremblant Capital is the biggest position holder in the company, with 28 million shares worth approximately $71 million.

6. PureCycle Technologies, Inc. (NASDAQ:PCT)

Harvard Management Company’s Stake Value: $18,536,000

Number of Hedge Fund Holders: 23

PureCycle Technologies, Inc. (NASDAQ:PCT) is a Florida-based company that produces recycled polypropylene. Its recycling process separates color, odor, and other contaminants from plastic waste feedstock and turns it into resin. Harvard Management Company owns 2.5 million shares of PureCycle Technologies, Inc. (NASDAQ:PCT) as of Q2 2022, worth $18.5 million and representing 2.14% of the total securities. The stock has been part of the Harvard University stock portfolio since Q1 2021.

On September 15, Stifel analyst Michael Hoffman initiated coverage of PureCycle Technologies, Inc. (NASDAQ:PCT) with a Buy rating and a $15 price target. The global demand for polypropylene is 178 billion pounds with a forecasted five-year CAGR of 3.8%, the analyst told investors in a research note. He added that he is optimistic about PureCycle Technologies, Inc. (NASDAQ:PCT) as an “attractive” sustainability investment which offers a first mover advantage, while also supporting global consumer packaging companies in terms of meeting high polypropylene recycled plastic content quota.

According to Insider Monkey’s records, PureCycle Technologies, Inc. (NASDAQ:PCT) was part of 23 hedge fund portfolios at the end of the second quarter of 2022, compared to 31 funds in the last quarter. Daniel Patrick Gibson’s Sylebra Capital Management is the leading position holder in the company, with more than 29 million shares worth $216.6 million.

Like Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), PureCycle Technologies, Inc. (NASDAQ:PCT) holds a prominent position in the Harvard University stock portfolio.

Click to continue reading and see Harvard University Stock Portfolio: Top 5 Picks.

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