In this piece, we will take a look at Harvard University stocks list: top 12 picks. If you want to skip our introduction to the institutional investor, then take a look at Harvard University Stocks List: Top 5 Picks.
This year turned out to be one of the best years for stocks after a tumultuous 2022 fueled by runaway inflation, monetary policy uncertainty, and recession fears. Tech stocks have outperformed the overall market, as depicted by the tech-heavy Nasdaq 100, rallying by more than 40%. The rally in the equity market has come on the back of easing inflationary pressures and growing confidence that the Federal Reserve has peaked on monetary policy tightening.
Asset manager Harvard Management Company (HMC), which manages funds in Harvard University’s $53 billion endowment, has been one of the beneficiaries of the rally in the equity markets. Established in 1974, the asset manager has delivered impressive results due to its financial market diversification.
Harvard Management Company allocates nearly 39% of its endowment portfolio to private equity, with 31% of the portfolio value going towards hedge funds. Public equity made up of tech stocks accounts for about 11% of the $888 million that the asset manager manages. Real estate accounts for 5% of the portfolio, with bonds accounting for 6%, cash at 5% and other real assets at 3%.
HMC’s investment strategy relies on a generalist model of breaking down silos among asset classes in search of the most attractive risk-adjusted returns. Central to the investment culture is the belief that a disciplined set of processes executed by a capable and experienced team will always generate superior returns in the long run. Consequently, the asset manager focuses on building investment processes and supporting analytics while maintaining partnerships with world-class asset managers.
For the 2023 fiscal year ending June 30, Harvard’s endowment delivered a 2.9% return, with investments generating about $1.3 billion. The endowment’s value stood at $50.7 billion, the largest of any university in the US. While alternative investments, which make up the majority of the endowment portfolio, affected the asset manager’s performance, it still outperformed its peers.
In contrast, MIT and Duke Universities delivered 2.9% and 1% investment losses, affirming Harvard University’s edge in the investment world.
Harvard Management Company bouncing back to profitability after a 1.8% loss on investments in fiscal 2022 came against strong exposure in high-flying tech stocks. Over the past six years, the Harvard Management Company has delivered a 9.2% annualized return, affirming its edge in picking stocks that outperform the overall market.
The asset manager has benefited from the triple-digit percentage gains posted by NVIDIA Corporation (NASDAQ:NVDA) and Meta Platforms, Inc. (NASDAQ:META), which account for a big share of its portfolio. It has also benefited from gains in Alphabet Inc. (NASDAQ:GOOG), Advanced Micro Devices and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), benefiting from the artificial intelligence boom.
Source:pexels
The strong tech stock exposure puts the endowment manager in a solid position to replicate the record 33.6% returns posted in 2022. Nevertheless, its performance heading into 2024 depends on the ever-changing macroeconomics. Resurgence in inflation levels remains the biggest headwind that could spell more trouble for equities.
Our Methodology
After analyzing Harvard Management Company’s latest 13F filing for the third quarter of 2023, we have compiled a list of the asset manager’s top stock picks. The stocks are listed based on the firm’s stake value in each holding while also considering their performance year to date.
12. Rocket Lab USA, Inc. (NASDAQ:RKLB)
Harvard Management Company’s equity Stake: $4.4 Million
Year to Date Gain: 11%
Founded in 2006, Rocket Lab USA, Inc. (NASDAQ:RKLB) is one of the big industrial plays in Harvard University’s portfolio. The space company provides launch services and space systems solutions for the space and defence industries. It also includes spacecraft design services, spacecraft components and spacecraft manufacturing services.
Rocket Lab USA, Inc. (NASDAQ:RKLB) is on track to get its launch business on track by year-end after delivering solid Q3 results that affirmed continued strength in the space systems division.
11. 10x Genomics, Inc. (NASDAQ:TXG)
Harvard Management Company’s equity Stake: $7 Million
Year to Date Gain: – 0.3%
Pleasanton, California-based 10x Genomics, Inc. (NASDAQ:TXG) is one of Harvard University’s plays in the healthcare sector. The life science technology company develops and sells consumable instruments and software for analyzing biological systems. It provides chromium and chromium connect instruments, microfluidic chips and other consumable products.
Harvard Management Company has held stakes in 10x Genomics, Inc. (NASDAQ:TXG) since Q1 2021. As of Q3 2023, it accounted for 0.79% of the portfolio.
Here is what Baron Discovery Fund said about 10x Genomics, Inc. (NASDAQ:TXG) in its Q3 2023 investor letter:
“We initiated a position in 10x Genomics, Inc. (NASDAQ:TXG), a company that sells innovative instruments and reagents for life sciences research. The company’s first platform, the Chromium, is dominant within the single-cell space. The Chromium utilizes advanced microfluidics to separate a sample into individual cells. Each cell is enveloped in its own droplet, where an individual reaction occurs to detect the expression profile of that cell. This occurs in parallel across tens of thousands of droplets, enabling high-throughput and granular characterization of a sample. 10x Genomics’ second platform is the Visium platform for spatial analysis. Visium employs a slide with many small dots (55 microns in diameter), each of which has a unique barcode. The barcodes are read by next-generation sequencing equipment. This enables researchers to detect expression patterns (genetic behavior) across geographic regions of a tissue sample. Finally, the company is launching its third major platform, the Xenium for in-situ analysis. The in-situ platform allows researchers to visualize biomarkers of interest right on the tissue slide, in real time. The images are processed on-instrument versus Visium, which requires barcodes that a separate sequencer reads.…” (Click here to read the full text).
10. Tango Therapeutics, Inc. (NASDAQ:TNGX)
Harvard Management Company’s equity Stake: $7.98 Million
Year to Date Gain: 3%
Tango Therapeutics, Inc. (NASDAQ:TNGX) is a biotechnology company based in Boston, Massachusetts, that discovers and develops drugs for cancer treatment. Its lead product is TNG908, a synthetic lethal small-molecule inhibitor being developed for the treatment of cancers with methylthioadenosine phosphorylase deletions.
9. Instacart (Maplebear Inc.) (NASDAQ:CART)
Harvard Management Company’s equity Stake: $15.43 Million
Year to Date Gain: -40%
Formerly known as Maplebear Inc., Instacart (Maplebear Inc.) (NASDAQ:CART) is a San Francisco company that provides online grocery shopping and delivery services for households in North America. It sells and delivers food, alcohol, consumer health products, pet care items, and readymade meals. Instacart (Maplebear Inc.) (NASDAQ:CART) offers services through a mobile application and website.
8. ASML Holding N.V. (NASDAQ:ASML)
Harvard Management Company’s equity Stake: $16.2 Million
Year to Date Gain: 19%
ASML Holding N.V. (NASDAQ:ASML) is another semiconductor play in Harvard University’s investment portfolio. The company produces, markets, and sells advanced semiconductor equipment systems. Its product line includes lithography, metrology, and inspection systems for memory and logic chipmakers. Its biggest customers are manufacturing facilities that make wafers that get cut into chips.
Up by 19% for the year, ASML Holding N.V. (NASDAQ:ASML) continues to outperform in the HMC portfolio. The asset manager has bought and sold shares in the company since Q2 2023 and held stakes worth $16.2 million as of Q3 2023, accounting for 1.82% of the portfolio.
Artisan Partners made the following comment about ASML Holding N.V. (NASDAQ:ASML) in its Q3 2023 investor letter:
“Bottom contributors to performance for the quarter included Dutch semiconductor equipment producer ASML Holding N.V. (NASDAQ:ASML). ASML declined due to ongoing weakness in leading-edge extreme ultraviolet (EUV) orders, uncertainty around sustainability of lagging-edge deep ultraviolet (DUV) demand, and media reports of further potential restrictions on exports to Chinese customers.”
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Harvard Management Company’s equity Stake: $17.21 Million
Year to Date Gain: 81%
Advanced Micro Devices, Inc. (NASDAQ:AMD), based in Santa Clara, California, is a semiconductor company that offers microprocessors and graphics processing units used in data centers, computers, and phones, among other devices. It provides processors under the AMD Ryzen, AMD Ryzen PRO, Ryzen Threadripper, Ryzen Threadripper PRO, AMD Athlon, AMD Athlon PRO, and AMD PRO A-Series brand names.
Advanced Micro Devices, Inc. (NASDAQ:AMD) remains one of Harvard Management Company’s top stock picks, going by the 81% year-to-date gain. The asset manager has held stakes in the chip giant since Q4 2021. The stock accounted for 1.94% of the portfolio as of Q3 2023, with stakes worth $17.21 million.
Here is what Artisan Partners, an investment management company, said about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2023 investor letter:
“Among our top contributors were Advanced Micro Devices, Inc. (NASDAQ:AMD), NU Holdings and Netflix. AMD’s data center CPUs are used in the cloud service provider (CSP) servers. In addition to the broader secular tailwind from cloud adoption, the company has a performance and pricing advantage over Intel, which we believe will enable it to continue capturing market share. However, the recent stock price rally was due to growing excitement around the company’s AI exposure. It will launch its new MI300 graphics processing unit (GPU) chip later this year to compete against the dominant market leader NVIDIA. Similar to its approach that won market share from Intel within the CPU market, AMD’s product will aim to provide similar performance at a more attractive price. AMD is already working with Microsoft and Meta, while Amazon publicly stated that it is evaluating AMD’s inferencing chips. Using assumptions around the total GPU market size, potential market share gains and price points, our research indicates this could be a $20 billion opportunity for AMD. That would nearly double its revenue. While the company has not historically missed many deadlines, there is execution risk as it works to manufacture and distribute these complex chips at scale, which, combined with an elevated valuation after the stock’s strong performance run, led us to trim the position.”
6. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Harvard Management Company’s equity Stake: $17.58 Million
Year to Date Gain: 29%
Incorporated in 1987 and headquartered in Hsinchu City, Taiwan, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is another semiconductor player in Harvard Management Company’s portfolio.
Harvard Management Company has bought and sold Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s shares since 2010 and held stakes worth $17.58 million as of Q3 2023, accounting for 1.98% of the portfolio.
Here is what Wedgewood Partners said about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its in its Q3 2023 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) detracted from performance, as revenues declined 10% from a year ago. The Company is lapping revenue growth of over +40% (compared to 2022) during every quarter of 2023, so it is more instructive to look at the health of the business through the lens of a multi-year timeframe. Most of the Company’s customers have seen near-term weakness in demand due to pandemic normalization. However, we think the longer-term trend of more silicon per device is still very much intact, and the Company is well-positioned to serve this, given its commanding market share in leading edge capacity. The Company’s aggressive investment in leading-edge equipment combined with tight development with fabless IC designers, plus the embrace of open development libraries, should continue to foster a superior competitive position and attractive long-term growth.”
Click to continue reading and see Harvard University Stocks List: Top 5 Picks.
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Disclosure: None. Harvard University Stocks List: Top 12 Picks is originally published on Insider Monkey.