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Harvard Management Company Renews Facebook Investments, Buys Gambling and Tech Stocks As Securities Value Spikes in Third Quarter

The Harvard Management Company manages Harvard's endowment and related financial holdings.
The Harvard Management Company manages Harvard's endowment and related financial holdings. By Steve S. Li
By Ellen M. Burstein, Crimson Staff Writer

The Harvard Management Company significantly increased its investment in Facebook after a substantial sell-off and bought stocks in a gambling company and a work-management app as the overall value of their public securities holdings increased by nearly 55 percent during the third quarter.

HMC’s gains and acquisitions in the third quarter — which ran from July 1 through Sept. 30 — were revealed as part of its latest filings with the Securities and Exchange Commission. Investment managers who oversee more than $100 million are required to disclose public securities holdings each quarter.

In its last filing on Aug. 14, HMC reported its securities were valued at about $459 million, a decrease from the previous quarter. They submitted an amendment to its filings on Sept. 18 that added over $713 million in shares in Royalty Pharma, a pharmaceutical company.

In the third quarter, HMC reported that the value of its public securities had increased to $1,818,481,000.

The number of HMC’s holdings in Facebook increased in quarter three by over 540 percent, to nearly 1.09 million. In the previous quarter, HMC had significantly reduced its shares in Facebook, from almost 1.3 million to just 170,000.

HMC also substantially increased its shares in Alphabet, Inc., the parent company of Google, by nearly 148 percent, bringing its value to nearly $230 million.

HMC also added shares in Intercontinental Exchange, a technology company; Scientific Games Corp., a company that provides gambling products to lotteries and casinos; Relay Therapeutics, a Cambridge-based biotechnology company; Dyntek, an IT-service management company; and Asana, a work management app.

The acquisition of Scientific Games Corp. for its public securities portfolio diverges from HMC’s traditional investing patterns. In the past, its public holdings have only been in biopharmaceutical and technology companies.

HMC also increased its shares in Palo Alto Networks, a technology company, by over 111 percent, and upped its shares in Powershares QQQ, an exchange-traded fund, by 72 percent.

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

Rutgers Business School professor John M. Longo wrote in an email that the investments were “not surprising” choices for the University, given the stature of Alphabet and Facebook and the “large weight” of the companies in equity indexes.

Longo noted that the decision could have been made due to favorable market conditions during the quarter.

“It is not clear from HMC’s Form 13F when they purchased the stocks over the quarter. There were brief pullbacks in technology stocks in late July and late September, possibly providing HMC with an attractive entry point. The major risks to the stocks are primary regulatory in nature and not due to near-term competitive threats,” he wrote.

Longo said that HMC could be taking into account worsening COVID-19 conditions in the United States.

“Over the short-term perhaps HMC’s management team anticipated continued lockdowns across parts of the country, which may provide a boost to these “stay at home” tech giants until COVID-19 vaccines are widely manufactured and disseminated,” he wrote.

—Staff writer Ellen M. Burstein can be reached at ellen.burstein@thecrimson.com. Follow her on Twitter @ellenburstein.

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