We recently published a list of Arrowstreet Capital Stock Portfolio: Top 10 Stocks to Buy. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other top stocks to buy from Arrowstreet Capital’s portfolio.
Arrowstreet Capital is a Boston-based independent investment management firm known for its quantitative investment strategies and discreet market presence despite overseeing substantial assets. Founded in 1999 by Bruce Clarke, former CEO of PanAgora Asset Management, along with John Y. Campbell and Peter Rathjens, the firm was created to manage institutional investments, focusing on international and emerging market equities. Its client base includes major institutions such as the Oregon Public Employees Retirement System, CalPERS, and Macquarie Group.
In terms of investment philosophy, Arrowstreet Capital operates as a unified team to manage client portfolios through a global, quantitative approach, leveraging data-driven insights to identify market inefficiencies and generate sustainable, risk-adjusted returns. Its strategy is based on research and technology, using quantitative models to uncover investment opportunities that may not be immediately apparent to the broader market. With a focus on global equities across both developed and emerging markets, the fund constructs diversified portfolios aimed at delivering long-term value.
Moreover, Arrowstreet Capital prioritizes continuous improvement in response to shifting market conditions, integrating new data sources and employing advanced data science tools to refine its investment insights and enhance portfolio performance. While Arrowstreet does not assume that ESG-focused stocks will consistently outperform, it acknowledges the impact of environmental, social, and corporate governance factors on profitability and risk, incorporating them into its models. The firm’s collaborative team structure ensures active portfolio management, with a strong emphasis on long-term investment strategies and talent development.
Peter Rathjens is the Chief Investment Officer at Arrowstreet Capital in Boston, Massachusetts. He holds a BA from Oberlin College and an MA from Princeton University. Bruce Clarke, Co-Founder and Chairman of Arrowstreet Capital, leads an institutional asset management firm overseeing a portfolio exceeding $140 billion. Previously, he served as CEO of PanAgora Asset Management and gained international experience working in Canada, the UK, Italy, and the US. Clarke earned an MBA from London Business School and a Bachelor’s degree from the University of British Columbia. John Young Campbell, a Partner and Co-Head of Research at Arrowstreet, has an extensive background in finance, having served as President of the American Finance Association, Director of Research at PanAgora Asset Management, a professor at Princeton University, and President of the International Atlantic Economic Society. He holds a doctorate from Yale University and an undergraduate degree from the University of Oxford.
Arrowstreet Capital’s latest 13F filing for Q4 2024 reported $124.94 billion in managed 13F securities, with a top 10 holdings concentration of 28.9%. This reflects the firm’s strategic focus on high-value investments while maintaining a diversified portfolio.
Our Methodology
The stocks discussed below were picked from Arrowstreet Capital’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from over 1,000 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders as of Q4: 166
Arrowstreet Capital’s Equity Stake: $6.67 Billion
Apple Inc. (NASDAQ:AAPL), ranked second among Arrowstreet Capital’s top stock picks, remains a dominant force in the global technology sector. Founded in 1976, the Cupertino-based company offers a diverse product lineup, including the iPhone, iPad, Mac, Apple Watch, and Apple TV, along with software like iOS and macOS. Its ecosystem extends to services such as Apple Pay, iCloud, and Apple Music, reinforcing its status as one of the most valuable tech firms.
In Q4 2024, Apple Inc. (NASDAQ:AAPL) reported $124.3 billion in revenue, marking a 3.95% year-over-year increase and surpassing analyst expectations. Earnings per share rose to $2.40, up $0.22 from the previous year. Additionally, on January 30, 2025, Apple’s Board of Directors announced a quarterly dividend of $0.25 per share, payable on February 13, 2025. Hedge fund interest in Apple Inc. (NASDAQ:AAPL) also increased, with 166 out of 1,009 funds tracked by Insider Monkey holding positions worth nearly $118.56 billion by the end of Q4 2024, up from 158 funds in Q3.
The company announced a $500 billion investment in the U.S. over the next four years, which includes building a new manufacturing facility, doubling its Advanced Manufacturing Fund to $10 billion, and hiring 20,000 employees primarily in R&D, silicon engineering, software development, and AI. Apple Inc. (NASDAQ:AAPL) will also produce servers in Houston starting this year, with a 250,000-square-foot manufacturing facility set to open in Texas by 2026, playing a crucial role in Apple’s AI initiatives. The company’s investment aligns with President Trump’s push for increased domestic manufacturing, with CEO Tim Cook emphasizing its commitment to American innovation. However, trade tensions with China pose potential risks, as new tariffs could impact Apple’s supply chain. In addition to expanding U.S. manufacturing, Apple is making a multibillion-dollar commitment to produce advanced silicon at TSMC’s Arizona facility and launching a manufacturing academy in Detroit to support AI-driven smart manufacturing.
Tsai Capital mentioned Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter. It stated:
“We initiated our investment in Apple Inc. (NASDAQ:AAPL) in 2016 and elevated it to a core holding in 2018, the same year the company introduced its redesigned 13-inch and 15-inch MacBook Pro models. Under Tim Cook’s visionary leadership, Apple has consistently redefined innovation in hardware and software.
The September 2024 launch of the iPhone 16, with its groundbreaking AI capabilities, including enhanced image generation tools, marks another inflection point. We believe this transformative device is the foundation for an AI-driven supercycle and could entice approximately 100 million consumers to upgrade, reinforcing Apple’s leadership in the industry.
Today, Apple’s ecosystem spans over two billion active devices, supported by a rapidly-growing base of subscription services. This strategy has helped to turbocharge customer engagement and spending. In the most recent fiscal year, which ended in September 2024, Apple’s high-margin services division accounted for 39.3% of total gross profits, up from 32.8% just two years ago.
Apple’s financial footing remains exceptional, with approximately $50 billion in net cash and marketable securities. Looking ahead, we expect earnings-per-share growth to outpace revenue growth, driven by margin expansion and continued share buybacks.”
Overall, AAPL ranks 2nd on our list of top stocks to buy from Arrowstreet Capital’s portfolio. While we acknowledge the potential for AAPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.