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Harvard Doubles Securities Investment Value, Sells Apple and Microsoft Stock

Federal Reserve Bank of Boston - HMC Office
Harvard Management Company is housed in the Boston Federal Reserve building.

UPDATED: Nov. 28, 2019 at 2:26 a.m.

Harvard Management Company has sold its stock in Apple and Microsoft and more than doubled the value of its declared securities investments since the end of the last fiscal year, according to U.S. Securities and Exchange Commission filings made available earlier this month.

HMC — the University’s investment arm, which manages its endowment — reported roughly $1.07 billion in securities investments in its third-quarter filings, more than double the roughly $405 million it reported in securities at the end of the second quarter in August.

At the end of the second quarter, Harvard reported just over $100 million in Apple holdings and only $32 million in Facebook. Filings for the third quarter indicate that HMC sold all of its securities in Apple and increased its Facebook holdings to more than $400 million.

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At the conclusion of the fourth quarter of 2018, nearly 83 percent of Harvard’s declared securities investments were in four large technology firms — Apple, Microsoft, Facebook, and Google’s parent company Alphabet. Other large academic endowments had far smaller investments in technology companies.

The University’s most recent filings show it has added an additional roughly $8 million to its Alphabet holdings since the second quarter this year, bringing its total to nearly $130 million. Harvard also sold off all of its Microsoft securities.

HMC has also purchased more than $10 million of stock in cybersecurity company Palo Alto Networks and nearly $50 million in Booking Holdings, a company that owns several online travel fare aggregators including Booking.com and Priceline.com.

HMC spokesperson Patrick S. McKiernan declined to comment, citing HMC's policy not to comment on individual investments.

Harvard values its holdings in Facebook, Palo Alto Networks, Booking Holdings, and Alphabet at about $972 million, representing more than 90 percent of the value of its declared securities investments.

Technology stocks have performed well in 2019 compared to the overall stock market. The S&P 500’s information technology index is up 41 percent since the beginning of the year, whereas the overall S&P 500 has increased nearly 25 percent.

Nonetheless, the $1.07 billion Harvard reported in securities last quarter represents a relatively small portion of the University’s overall endowment, which is valued at $40.9 billion.

Harvard’s overall endowment returns have lagged behind those of its peers in recent years. The University’s endowment returned 6.5 percent in fiscal year 2019, its lowest returns in two years.

This year also marks the first year that Harvard will pay a tax on its endowment returns due to a Republican-led tax overhaul passed in 2017. The University has lobbied to overturn the 1.4 percent excise tax over the past several years to no avail.

The SEC requires investment managers with more than $100 million under management, like HMC, to disclose securities holdings annually. Managers are not required to report mutual fund holdings, but they must include their exchange-traded funds.

— Staff writer Kevin R. Chen can be reached at kevin.chen@thecrimson.com. Follow him on Twitter @kchenx.

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