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Endowment Scraps Apple, Slashes Facebook Holdings in Fourth Quarter

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Harvard Management Company sold its holdings in Apple and nearly half its shares in Meta Platforms — formerly known as Facebook — to shrink its public securities portfolio by almost 38 percent to $1.07 billion during the fourth quarter of last year.

The move marks a reversal from HMC’s position at the end of the third quarter, when it increased its holdings in Facebook by 37 percent. At the end of the fourth quarter, which ran from Oct. 1 to Dec. 31, Meta Platforms accounted for $125 million of the University’s stock portfolio, down from $242 million.

HMC’s acquisitions and liquidations were reported in its latest filings with the Securities and Exchange Commission, which requires investment managers who oversee more than $100 million in assets to disclose their public securities portfolio each quarter.

Though HMC sold off stocks in Apple and Meta Platforms, it maintained almost all of its holdings in Alphabet, the parent company of Google. HMC’s holdings in the major technology corporation are currently valued at $177 million, up from $163 million in the previous quarter.

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Additionally, HMC sold all of its exchange-traded funds, or ETFs – managed funds that hold many underlying securities. Activist groups such as the Harvard Prison Divestment Campaign have previously criticized the University’s investments in certain ETFs, claiming that they represent Harvard’s indirect holdings in the prison industry.

The University also expanded its investments in the electronics industry, purchasing shares of Intel and NVIDIA, as well as various semiconductor companies, including Advanced Micro Devices, ASML Holding N.V., and Taiwan Semiconductor Manufacturing Company.

In its largest acquisition of the quarter, HMC purchased 5,262,161 shares totaling $36 million of the biotechnology company EQRx. To date, EQRx’s stock price has fallen by 53 percent in 2022.

During the fourth quarter, HMC also reduced its shares of Royalty Pharma, a company that helps fund clinical trials for new drug treatments, by 51 percent; Affirm Holdings, a financial technology company, by 77 percent; and Sana Biotechnology, a biotechnology company that creates engineered cells to treat disease, by 60 percent.

Harvard’s investment arm continued to hold assets in other biotechnology and pharmaceutical companies, despite their value plummeting in the fourth quarter. One biotechnology company in HMC’s portfolio, Generation Bio, saw its share price fall by 72 percent.

John M. Longo, a professor at Rutgers Business School and the Chief Investment Officer for Beacon Trust, wrote that HMC likely reduced its exposure to public equities in anticipation of lower returns from stocks over the next decade.

“A reduction in its equity portfolio at year-end is not surprising given that the S&P 500 has more than doubled over the past three years,” Longo wrote. “Traditional U.S. equity and fixed income investments are likely to provide returns below their historical long-term averages for the decade ahead, since valuations are starting from high levels and we [are] entering a period of rising interest rates and taxes.”

Longo called HMC’s liquidation of Meta Platforms and Affirm Holdings shares “prescient,” pointing to the companies’ 35 percent and 53 percent drop in stock price, respectively. Longo also called HMC’s reduction in Royalty Pharma “a bit surprising,” though he noted it still represents a large portion – $138 million – of HMC’s equity portfolio.

“It is most likely a risk reduction trade, rather than something fundamentally wrong with the stock,” Longo wrote.

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

—Staff writer Dekyi T. Tsotsong can be reached at dekyi.tsotsong@thecrimson.com.

—Staff writer Eric Yan can be reached at eric.yan@thecrimson.com.

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