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The Harvard Management Company increased its direct holdings of Alphabet and Meta and continued its major sell off of biopharma holdings — which now make up less than 1 percent of the portfolio — during the last three months of 2023.
Meta and Alphabet together make up 70 percent of the HMC’s public portfolio. Light & Wonder Inc., a company that provides gambling services, makes up the third largest stake in HMC’s portfolio.
The total value of the public portfolio rose 12.54 percent, eclipsing $1.18 billion in assets under management — the highest level for HMC in two years. The increase in the holdings of HMC — which is responsible for stewarding Harvard’s $50.7 billion endowment — comes as the S&P 500 continues to hit fresh records and beat Wall Street expectations, closing above 5,000 for the first time on Friday.
Each quarter, the U.S. Securities and Exchange Commission requires any portfolio with over $100 million in investments to disclose their direct public holdings. The data released by the SEC last week details the HMC’s ownership changes in publicly traded companies during the fourth quarter of 2023.
During the latest quarter, HMC sold its stake in eight of its nine biopharma companies, which are counted as part of the healthcare sector.
The persistent sell-off of stocks within the sector continues a trend that began in early 2021.
In 2020, at the height of the Covid-19 pandemic, healthcare stocks represented 67 percent of HMC’s portfolio. The holdings have now been reduced to less than 1 percent.
HMC’s most significant biopharma sell off came roughly two months before Alan M. Garber ’76 was named Harvard’s interim president following Claudine Gay’s surprise resignation.
Shortly after becoming interim president, Garber announced he would step down from Exelixis, a biotech company whose board he first joined in 2005. He will remain on the board of Vertex, a pharmaceutical company he first joined in 2017.
Garber’s relationships with the healthcare sector raised questions about potential conflicts of interest due to his position on the HMC board of directors.
HMC spokesperson Pat McKiernan previously said that HMC does not have direct holdings in Vertex or Exelixis.
The healthcare sector has been under strain after facing its second straight year of annual losses in 2023. It is expected to face an uphill climb towards a recovery as the sector remains under scrutiny for its high pharmaceutical prices as Congress kicks off Medicare drug price negotiations.
Technology investments reached a record-setting 98 percent of the portfolio — up from 53 percent in 2022 — following the latest purchases of more than 1.3 million shares.
With a 34 percent increase in Meta holdings, its total value in the portfolio jumped to $456 million. Similarly, a 56 percent increase in HMC’s holdings of Alphabet stock — the parent company of Google — marked a value of $379 million in the portfolio.
Adding to the near total sell-off of biopharma holdings, HMC sold its full position in Grab — a Singaporean tech app — after purchasing over 13 million shares since December 2021.
HMC sold their holdings after shares declined by over 50 percent in value, the first shares were purchased at $7.13 and all were sold at $3.46 apiece last quarter. Grab was once hailed as a long-term growth investment after emerging markets experienced lowered evaluations in 2020, but failed to meet investor expectations.
HMC preserved its direct holdings in semiconductor companies, the most notable including NVIDIA, Taiwan Semiconductor Manufacturing Company, and Advanced Micro Devices. They combine for roughly 8 percent of the portfolio.
While HMC’s public portfolio is dominated by three Magnificent Seven stocks — a group of the highest performing U.S. tech companies — their performance in the public market continues to trail the S&P 500, a long-term trend for HMC which tends to expose the endowment to low risk investments.
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