5 Stocks Endowment Funds Are Buying in 2012
While traditional institutional investors get a lot of attention from Wall Street, endowment funds are shoveling gains to a different sort of "institution": colleges, universities and nonprofits. And with billions of dollars in assets and dedicated in-house portfolio management teams, the moves being made by these institutions of a different sort are a big deal.
University endowment managers have cash (the five biggest college endowments alone manage more than $86.5 billion), and they have talent (veterans include Mohamed El-Erian, the Pimco co-CIO who previously headed Harvard's mammoth endowment) -- and thanks to 13F filings with the SEC, we can take a look at the stocks endowments are bullish on this quarter.
To be sure, stocks and ETFs only make up part of endowments' AUM; filings show around $23.7 billion in equity investments as of the most recent quarter. But they also poured significant assets into new stock positions this past quarter.
Today, we'll take a look at five of the biggest position increases endowment funds took on .
The biggest position increase for last quarter came from oil giant Exxon Mobil (XOM) -- endowments saw the market value of their Exxon holdings increase by $93.13 million last quarter.
A big part of that performance came from oil prices in the last quarter: with crude prices sitting in the triple-digits for a sustained period, those elevated prices are having a direct effect on Exxon's profitability. That's helped to spur a 20% rally in shares over the last six months.
As an integrated supermajor, Exxon has its hands in everything from pumping oil and gas out of the ground to transporting, refining, and retailing gasoline on the other end of the process. By having a hand in every step in the process, Exxon generates bigger profits than it otherwise would -- and while margins for integrated firms are lower than you'd see at pure E&P names, margins for each step of the process are actually higher than they'd be at an independent firm.
Exxon has been making big bets on natural gas in the past few years, absorbing XTO Energy to dramatically increase the gas mix in Exxon's production. While that has been a headwind in the last couple of years as natgas prices struggle to hold their ground, it could become a massive tailwind as consumers look to substitute costly oil with a cheaper energy alternative.
Exxon is a huge company, but investors shouldn't count out growth because of size alone.