Endowment adds fintech companies and reduces EQT in Q4

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The changes were reflected in Yale’s latest SEC filing.


Staff reporter


Tim Tai, staff photographer

In the final months of 2021, Yale’s endowment added two fintech companies and a natural gas company to its portfolio while significantly trimming its stakes in EQT Corporation, a U.S. energy company, according to its latest filing with the DRY.

In one of the biggest moves of the quarter, Yale trimmed its stake in EQT Corporation, an energy company that focuses on hydrocarbon exploration and pipeline transportation. The total value of the University’s holdings in EQT Corporation fell from $263 million to $70 million, a decrease of 73%. At the same time, however, Yale also acquired shares totaling $41 million in Antero Resources Corporation, a natural gas and oil company whose ties to Yale have drawn criticism from climate justice groups Fossil Free Yale and the Endowment Justice Coalition in the past.

The changes were reported in Yale’s latest SEC filing. Each quarter, the Security and Exchange Commission requires institutional investment managers managing more than $100 million to disclose holdings of eligible government securities using Form 13F. Yale is not required to report securities for which he holds less than 10,000 shares and less than $200,000 in aggregate fair market value. The fourth quarter ended on December 31 and Yale filed the report on February 14, although the filing contains an SEC disclaimer stating that “the reader should not assume that the information is accurate and complete. “. University officials declined a request for comment on the filing, citing the university’s policy of not commenting on investments.

“Energy stocks have been among the best performing stocks over the past year,” Rutgers University professor John Longo wrote in an email to The News. “In an inflationary environment, commodities generally do well.”

Oil and natural gas are among the most common commodities. Commodity prices have risen recently and are also much more volatile due to uncertainty over Russian sanctions, according to James Huang SOM ’22 and Gurkamal Pannu SOM ’24, who lead investment research bulletins for the Yale School of Management Investment Management Club. This makes the trade-off for direct commodity investments less favourable, they said. Huang and Pannu are not affiliated with the Yale Investments Office.

Longo added that fixed-income investments — which include US Treasuries — are becoming “less attractive” as bond yields risk underperforming inflation. The latest consumer price index reflected 7.5% inflation over the past year. To counter this inflation, the Federal Reserve generally exercises a restrictive monetary policy and increases interest rates. Longo said when interest rates rise, “value stocks” of established companies with strong cash flows tend to do particularly well.

In addition to Antero, two fintech companies have been added to the portfolio: Docusign and Flywire. Yale acquired $5.7 million worth of stock in Docusign, an electronic signature company, and $6.2 million in Flywire Corporation, a company that focuses on electronic payments.

“The world’s financial payment systems are being rewired with the help of fintech companies,” Longo wrote. “The pandemic has accelerated this change with companies such as DocuSign, PayPal and Block leading the way. These e-payment companies offer a fast and convenient way to send money and transact, especially remotely, so they are likely to continue to grow.

The report also revealed that Yale no longer holds shares of Pubmatic Inc., Amplitude Inc., Illumina Inc., Warby Parker Inc. and Stitch Fix Inc., which were previously part of the portfolio according to the third quarter report. Additionally, between the third quarter filing and the fourth quarter filing, Yale’s holdings in the Vanguard FTSE Emerging Markets ETF and the Vanguard FTSE Europe ETF decreased by $91 million and $20 million, respectively. Unlike stocks issued by companies, index funds are portfolios of securities designed to track the growth of a specific financial market index.

According to Yale Staffing Report 2020 – the latest year for which data is available – the Yale Investments Office allocates 2.3% of the endowment to domestic stocks, which are publicly traded securities on the US stock market. The report adds that Yale’s domestic stock portfolio has posted returns of 9.7% per year for the past 20 years. In comparison, the S&P500 the return for the same period was 7.45%, or 5.3% when adjusted for inflation.

In a previous interview with The News, Sarah Reed, General Counsel at RA Capital Management, explained that endowments have the ability to allocate larger percentages of their portfolio to more illiquid asset classes, such as private equity. investment and venture capital.

“Anyone who manages an endowment wants to allocate some of their endowment to very high-risk, potentially high-reward investments, that’s part of good portfolio management,” Reed said. “And also, the longer your time horizon, the more you can allocate to these illiquid asset classes.”

Endowment expert Charles Skorina also added that, in an effort to outperform public markets, endowments may choose to invest more in private equity and venture capital, which are less liquid and can generate higher returns. students.

In 2020, 22.6% of Yale’s endowment was invested in venture capital and 15.8% was invested in leveraged buyouts.




ALEX YE


Alex Ye covers endowments, finance and donations. Originally from Cincinnati, Ohio, he is a freshman at Timothy Dwight majoring in computer science and math.

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