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 AT&T Inc. (NYSE:T) 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).
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AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders as of Q4: 80
Arrowstreet Capital’s Equity Stake: $1.33 Billion
Analysts revised their Q1 2025 earnings per share (EPS) estimate for AT&T Inc. (NYSE:T), increasing the forecast from $0.51 to $0.52 per share. The consensus estimate for the multinational telecommunications company’s full-year 2025 earnings remains at $2.14 per share. Additionally, analysts projected its fiscal year 2025 earnings at $2.07 per share and estimated Q1 2026 earnings at $0.55 per share.
AT&T Inc. (NYSE:T) last released its quarterly earnings results on January 27. The company reported a substantial year-over-year increase in net income, rising to $4.4 billion from $2.6 billion in the previous quarter. However, full-year net income declined to $12.3 billion from $15.6 billion year-over-year, reflecting broader industry challenges and heightened investment in network upgrades. Earnings per share for the quarter remained at $0.54, surpassing analyst expectations of $0.51. These results reinforce AT&T’s strong financial standing as it continues to invest in next-generation technology and infrastructure. With strategic plans for network expansion and share repurchases in the latter half of 2025, AT&T Inc. (NYSE:T) remains committed to delivering long-term value to both customers and shareholders, earning recognition as a top stock to buy according to Arrowstreet Capital.
CEO John Stankey emphasized the company’s increasing use of AI and cloud technology to enhance customer interactions, improve products, and streamline operations. He noted that AI-driven advancements have already led to improved efficiency, particularly in software development, resulting in cost reductions. Addressing concerns about emerging AI competition, Stankey acknowledged that while AI technology is still evolving, AT&T Inc. (NYSE:T) is well-positioned to leverage its vast data resources to refine pricing strategies, better target customers, and strengthen its market presence. Looking ahead, he expressed confidence that by 2025, the company will showcase strong business momentum driven by the successful integration and execution of AI initiatives.
TCW Relative Value Large Cap Fund stated the following regarding AT&T Inc. (NYSE:T) in its Q3 2024 investor letter:
“AT&T Inc. (NYSE:T), based in Dallas, TX, is a nationwide provider of voice, video, and data communications services to businesses and consumers in the wired, wireless, and broadband. At initiation, the stock had a $141 billion market capitalization and met all five valuation factors with an above market dividend yield of 5.6%. From a sustainability prism, the company completed its commitment to invest $2 billion by the end of 2023 to help bridge the digital divide. AT&T is working on enabling low-income households to access to low-cost broadband services through its Access service plan as well as reaching out to more rural communities and Tribal lands where internet access remains a challenge. It is nearly 85% the way to providing one million people in need with digital resources through AT&T Connected Learning® with the goal to be reached by the end of 2025. In 2020, the company announced that it is committed to be carbon neutral by 2035 with zero carbon emission across all operations. It is deploying Smart Climate Solutions – through efforts like its Connected Climate Initiative – that will help enable its business customers to reduce their emissions as well. The company’s goal is to help collectively reduce its emissions by one billion metric tons – a gigaton – by 2035, compared to 2018 levels. The primary catalysts are new/strong management and restructuring. John Stankey was appointed CEO in July 2020 and he is committed to refocusing the company and improving its financial performance. The company combined its WarnerMedia operation with Discovery during 1Q:22 which eliminated AT&T’s exposure to the rapidly evolving media industry and refocused its core telecommunication business thus eliminating a major drag on profitability and the company’s balance sheet by reducing long-term debt from a peak $176 billion during 2020 to $142 billion at the end of June 2024 quarter. AT&T is moving aggressively to reduce cost and sell non-core assets such as its advertising platform Xander to Microsoft† which was accomplished during 2022. The company has redesigned its network to be software driven structure reducing the capital investment cycle in its national network – resulting in a network that is flexible with unrivaled speed and reliability – thus enhancing its nationwide position. By the end of 2023, it expanded its 5G network to reach more than 302 million people in nearly 24,500 cities and towns in the U.S. The company’s mid-band 5G+ network alone grew to cover more than 210 million people. AT&T is one of the largest investors in digital infrastructure in the U.S. Over the five years ending 2023, the company invested nearly $150 billion primarily in its wireless, fiber optics, and wireline networks. The extensive restructuring and refocusing of AT&T on its core business should result in improved earnings and cash flow while at the same time reducing uncertainty for shareholders.”
Overall, T ranks 8th on our list of top stocks to buy from Arrowstreet Capital’s portfolio. While we acknowledge the potential for T 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 T 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.