Tuesday, September 1, 2009

Harvard Boosts Equity Holdings

Harvard Boosts Equity Holdings

Published On 8/31/2009 11:01:26 PM

Crimson Staff Writer

The value of Harvard’s publicly traded equity portfolio has nearly doubled in recent months as the University reinvests—particularly in emerging markets and in Asia—after dramatically slashing stock holdings last fall amidst the global financial crisis.

According to a Securities and Exchange Commission disclosure report released in August, Harvard had 112 publicly traded equity holdings valued at over $1.4 billion as of June 30. The figures represent a significant increase from the 99 holdings worth $771 million reported three months earlier.

The SEC’s 13F report only discloses a small fraction of the University’s total investments—it does not list assets such as foreign stocks, private equity, bonds, and real assets—but suggests that in rebounding from recent market turmoil, Harvard Management Company has been boosting its investments in foreign markets by increasing shares in private companies and exchange-traded funds, which are traded like stocks and track major indices such as the Nasdaq and the S&P 500.

HMC is responsible for overseeing Harvard’s endowment, which was valued at nearly $37 billion before the market crash last fall. University officials have planned for a 30 percent drop in the endowment’s value for the year ending June 30. Definitive endowment returns for that period are expected to be released in the next few weeks.

In the three months leading to June 30, the University increased its holdings in the iShares MSCI Emerging Markets Index Fund—the single largest holding disclosed—from 8.3 million to 9.7 million shares, and the value of those holdings have increased from $205 million to $313 million.

Harvard also more than doubled its holdings in exchange-traded funds (ETFs) tracking South Korean and Indian indices—valued at over $200 million—and the total value of its holdings in ETFs tracking Chinese, Brazilian, South African, and Mexican indices increased from roughly $291 million to $472 million. The University reportedly bought nearly seven million shares in an ETF tracking Taiwanese indices—reversing its earlier decision to sell the two million shares it had in the fund as of last September.

Other investments of note include over $55 million in an ETF tracking Russian indices, and multi-million dollar repurchases of shares in mining giant BHP Billiton and oil and gas producer China National Offshore Oil Corporation.

While the value of Harvard’s equity investments has increased, it remains modest compared to where it stood last September, when the University had nearly $3 billion invested in 213 public equity holdings. Jane Mendillo, president and CEO of HMC, said in an interview with The Crimson in May that she had “accelerated building a cash reserve” last fall—part of a larger policy portfolio change—but that the Company was “aggressively analyzing investment opportunities” and reinvesting cash coming out of the financial crisis. University spokesman John D. Longbrake declined to comment for this article.

HMC announced in early August the appointment of two senior investment managers to the Company’s internal team—a move that seems to dovetail with the apparent emphasis on emerging markets and Asia. Emil Dabora, a senior managing director at New York firm Caxton Associates, was appointed an equity portfolio manager, while Michele Toscani, a veteran of investment groups in Japan, was added to the International Fixed Income team.

—Staff writer Peter F. Zhu can be reached at pzhu@fas.harvard.edu

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