Endowment Sells Off Stocks in Major Technology Companies, Invests in Microsoft and Biopharmaceutical Companies in Fourth Quarter

In the final months of 2020, Harvard Management Company sold its shares in multiple major technology companies, including Google’s Alphabet, Inc., and made new investments in others, like Microsoft, while maintaining portfolio growth from the previous quarter.

In the third quarter, the value of HMC’s public securities soared, increasing by nearly 55 percent. At the close of the fourth quarter, which ran from Oct. 1 to Dec. 31, the value had grown about an additional one percent, to over $1.84 billion.

HMC reported the figure in its latest filings with the Securities and Exchange Commission, which requires investment managers who oversee more than $100 million to disclose public securities holdings each quarter.

HMC jettisoned all its shares in three technology companies in which it previously held significant shares — Alphabet, Inc., the parent company of Google; Uber Technologies; and Intercontinental Exchange. They were valued at around $230 million, $99 million, and $116 million, respectively, at the end of the third quarter.

HMC also significantly reduced its shares in two other technology firms, Facebook and Palo Alto Networks. The share reductions — by around 63 percent and 77 percent, respectively — came after an increase in shares in the third quarter. At the end of the fourth quarter, its holdings in Facebook were valued at around $111 million; its holdings in Palo Alto Networks were valued at around $59 million.

Though it abandoned some companies, HMC made new investments in others — including a major investment in Microsoft Corp., valued at around $182 million at the end of 2020.

At various points in the fourth quarter, financial analysts noted reductions in the value of the company’s share price. On Oct. 8, for example, Forbes noted that share price was down 8 percent in the last month.

Harvard also bought almost one million shares, valued at $206 million, in Salesforce, a software company that specializes in customer relationship management.

John M. Longo — a professor at Rutgers Business School and the Chief Investment Officer for the Beacon Trust — wrote in an email that the University’s new holdings in Microsoft and Salseforce are “excellent long-term prospects.”

“There are two new sizeable positions in HMC's public equity portfolio, Salesforce and Microsoft, with 11.2% and 9.9% portfolio weights at the end of 2020, respectively,” Longo wrote. “They are blue-chip software companies with excellent long-term prospects, so I wouldn’t be too concerned with their high weights.”

Other new acquisitions included Twilio, a cloud communications platform; Progyny, a fertility benefits manager; and the Carlyle Group, a private equity and asset management firm.

Royalty Pharma, a pharmaceutical company, remained as HMC’s largest investment, now valued at around $735 million — almost 40 percent of the public portfolio. Though HMC did not purchase additional shares in the fourth quarter, the value of its existing 14,690,780 shares increased by almost 19 percent.

“HMC’s biggest public equity position remains Royalty Pharma, which had a very successful IPO last year,” Longo wrote.“I would expect them to reduce this weight over time as the lockup expiration occurs.”

A lockup period is the predetermined amount of time after an initial public offering, or IPO, in which large shareholders are prohibited from selling their shares. The lockup period for Royalty Pharma, which had its IPO in June, was set to expire mid-December.

HMC also added shares in five other biopharmaceutical companies: AbCellera Biologics, Praxis Precision Medicines, Kinnate Biopharma, Seres Therapeutics, and Gemini Therapeutics.

Patrick S. McKiernan, a spokesperson for HMC, declined to comment on the filings, citing its policy not to comment on individual investments.

—Staff Writer Virginia L. Ma can be reached at virginia.ma@thecrimson.com.

—Staff Writer Kevin A. Simauchi can be reached at kevin.simauchi@thecrimson.com. Follow him on Twitter @Simauchi.