In terms of overall performance, the competition between these "old lovers" in the last fiscal year was not as fierce as in previous years. Since this year, Harvard, which had performed poorly in the past, has overtaken itself.
Drawing / Zhang Yidi
Text | Lin Jingnan (Ed Lin)
As of the close of trading on February 12, Eastern Time, the U.S. traded securities held by the Harvard University Endowment Fund have recorded a 9.4% increase this year, outperforming the competition. That compared with a 9.1% gain for a similar portfolio at rival Yale University.
This data is calculated by "Barron's" based on the 2018 year-end portfolio status submitted by the two universities to the U.S. Securities and Exchange Commission (SEC) last week. The assessment uses several parameters and assumes that the positions held by the two universities’ endowments have not changed since December 31, 2018.
Harvard University and Yale The disclosed securities represent only their U.S.-traded stocks and exchange-traded funds (ETF), which represent only a small portion of the two schools’ endowments. As of December 31, 2018, Harvard's U.S.-traded securities portfolio was worth $475 million, and Yale's U.S.-traded stocks and ETFs were worth $681 million; as of June 30, 2018, Harvard's total endowment was $39.2 billion. US dollars, while Yale’s is US$29.4 billion.
Harvard University declined to comment for this article. Yale University did not respond to Barron's' request for comment.
Harvard's investment portfolio has increased in value as it increased its holdings in Facebook (FB) - Facebook was founded by Harvard dropout Zuckerberg . The university's endowment purchased an additional 48,000 shares of Facebook stock in the fourth quarter of 2018. As of the end of 2018, its total shareholding reached 377,000 shares. Although Facebook's stock price plummeted by a quarter in 2018 due to customer privacy breaches, the company's stock price has rebounded by nearly 26% so far this year.
The increase in holdings of Microsoft, another technology giant also co-founded by a Harvard dropout, has dragged down the performance of Harvard's endowment fund. The school purchased an additional 246,500 shares of Microsoft stock in the fourth quarter of last year, bringing its total holdings to 1.13 million shares. Unfortunately, the software giant has managed to eke out a 5.2% gain so far this year. "Barron's" noted that Microsoft's second-quarter revenue growth reported in January was minimal, but some bullish analysts still supported Microsoft stock.
Harvard saved millions by reducing its holdings in Apple (AAPL) in the third quarter of 2018. However, in the fourth quarter, the endowment fund re-purchased 933,000 Apple shares, holding a total of 1.04 million shares as of the end of 2018. Unfortunately, Apple's stock, Harvard's most valuable investment among U.S.-traded securities, has only risen 8.3% this year, dragging down performance.
Yale sold nearly its entire investment in natural gas exploration and extraction operator Antero Resources (AR) in the fourth quarter of 2018, plunging from 4.39 million shares at the end of the third quarter to 38,000 shares . This reduction in stake holdings has been a good thing for Yale so far, as Antero shares are down 1.3% year to date.
"Barron's" reported last year that the Yale University endowment sold some shares of JBG Smith Properties (JBGS). As of December 31, 2018, Yale owned 3.87 million shares of Smith Properties stock, down from 5.1 million shares at the end of the third quarter. But the real estate trust has recorded gains of 14.3% in 2019.
Yale University also holds small positions in two recently public stocks that have performed well this year. Electronic signature service provider DocuSign (DOCU) went public in April last year, and biotechnology company Arvinas (ARVN) conducted its initial public offering in September of that year. In 2019, these two stocks gained 31.3% and 71.6% respectively. Unfortunately, these investments are relatively insignificant for Yale—Yale holds 184,600 shares in Arvinas, valued at $4.1 million; and 41,300 shares in DocuSign, valued at $2.2 million.
Harvard University also has two tiny positions in biotechnology stocks. Although its stock price is only in the single digits, it is a hot stock in 2019. Harvard University owns 640,600 shares of Aduro Biotech (ADRO) and 411,400 shares of bone marrow transplant biotechnology company Magenta Therapeutics (MGTA), valued at $2.2 million and $3.3 million respectively. Aduro is up 32.6% year to date, while Magenta Therapeutics has surged 41.9%.
The relative underperformance of Harvard University's endowment has been reported before, but the market value of the fund's U.S.-listed stock and ETF positions has risen so far this year, at a rate only slightly lower than that of the star benchmark in index investing, the Standard. The S&P 500 index rose 9.5%; Yale University's endowment lagged the index's gains.
In terms of overall performance, the competition between these "old lovers" in the last fiscal year was not as fierce as in previous years. In the fiscal year that ended June 30, 2018, Yale’s endowment returned 12.3%, slightly outpacing Harvard’s 10% gain.
Compiler: Zhang Yidi
Editor: Zhao Jie
Editor and reviewer: Li Rong, Kang Juan
Copyright statement: "Barron's" reported "Facebook Stock Is Helping Harvard’s Stockpickers Beat Yale’s" on February 13, 2019. "Caijing" is exclusively authorized by Barron's, a subsidiary of Dow Jones, in mainland China. Original articles may not be reproduced without permission.
(*The content of this article is for reference only, and the investment advice does not represent the tendency of "Barron's"; the market is risky, so investment must be cautious.)
