Harvard University’s endowment manager, Harvard Management Company, has drastically reduced its investments in healthcare stocks and increased its investments in tech stocks, according to its latest filing with the U.S. Securities and Exchange Commission. The filing, which covers the fourth quarter of 2023, shows that healthcare stocks now account for less than 1 percent of HMC’s public portfolio, while tech stocks account for 98 percent. The filing also reveals that HMC’s public portfolio has grown by 12.54 percent, reaching $1.18 billion in value.
HMC’s portfolio changes reflect its strategic decisions and market trends, as well as its response to the Covid-19 pandemic and its aftermath. The portfolio changes are:
- A massive sell-off of biopharma stocks, which are part of the healthcare sector. HMC sold its stake in eight of its nine biopharma companies, leaving only one company, Moderna, in its portfolio. Biopharma stocks used to make up 67 percent of HMC’s portfolio in 2020, when the Covid-19 pandemic boosted the demand and value of vaccine and treatment developers. However, biopharma stocks have been under pressure and underperforming since then, due to the high costs and risks of research and development, the regulatory uncertainties and challenges, and the public scrutiny and criticism over drug prices and access.
- A significant increase in tech stocks, especially Meta and Alphabet, which are part of the technology sector. HMC bought more than 1.3 million shares of tech stocks, raising its stake in Meta by 34 percent and in Alphabet by 25 percent. Meta and Alphabet now make up 70 percent of HMC’s portfolio, with Meta being the largest holding. Tech stocks have been soaring and outperforming since the Covid-19 pandemic, due to the increased demand and innovation in online services and platforms, such as social media, e-commerce, cloud computing, and artificial intelligence.
The portfolio changes matter because they affect the performance and returns of HMC, which is responsible for managing Harvard’s $50.7 billion endowment, the largest in the world. The endowment supports Harvard’s academic and research activities, as well as its financial aid and operations. The portfolio changes also matter because they reflect the vision and direction of HMC, which is led by its CEO, N.P. Narvekar, who took over in 2016 and initiated a major overhaul of HMC’s structure and strategy.
HMC’s Portfolio Changes: What They Imply and What They Coincide With
HMC’s portfolio changes imply some implications and coincidences, such as:
- A shift in HMC’s risk appetite and diversification strategy, which may indicate a more aggressive and concentrated approach to investing, as well as a more responsive and adaptive approach to market conditions and opportunities.
- A contrast with HMC’s peer institutions, such as Yale and Stanford, which have maintained or increased their investments in healthcare stocks, and have diversified their portfolios across various sectors and asset classes, such as energy, consumer, and real estate.
- A coincidence with the resignation of Harvard’s president, Claudine Gay, and the appointment of Harvard’s interim president, Alan M. Garber ’76, who both have ties to the healthcare sector. Gay resigned in December 2023, amid allegations of mishandling sexual misconduct cases at Harvard. Garber, who is also a member of HMC’s board of directors, announced in January 2024 that he would step down from the board of Exelixis, a biotech company, but remain on the board of Vertex, a pharmaceutical company. Garber’s involvement with the healthcare sector has raised questions about potential conflicts of interest with HMC’s investments.
For more information on HMC and its portfolio changes, visit thecrimson.com.
