In this article, we will take a look at billionaire Cliff Asness’ top 10 technology stock picks. If you want to see more of billionaire Cliff Asness’ top 10 technology stock picks, go directly to Billionaire Cliff Asness’ Top 5 Technology Stock Picks.
Billionaire Cliff Asness is the founder of quantitative giant AQR Capital Management which as of the end of September had a 13F equity portfolio of over $40 billion.
As a quantitative fund, AQR Capital Management uses sophisticated data models and intensive computing to decide what to buy and sell. Given the fund’s huge size and Asness’ belief in diversification, AQR Capital Management has thousands of positions and regularly rotates in and out of stocks each quarter.
Given how big the tech sector in the United States is, AQR Capital Management has substantial positions in many leading tech stocks.
In terms of the S&P 500 index, for example, the tech sector accounted for 28% of the index as of April 2022, or more than the combined weighting of the health care and consumer discretionary sectors.
In terms of AQR Capital Management’s portfolio, tech stocks account for 7 of the fund’s top 10 positions.
Technology stocks account for a substantial percentage of the S&P 500 and also AQR Capital Management’s top positions due to the growth in the industry over the last thirty years.
Given tech advancements in semiconductors, computers and smartphones have become more affordable over time. With billions of more potential customers, some software, hardware, and internet companies have grown substantially as a result. With their scale, those companies have created even more useful services that have made more people want to buy computers and smartphones.
Given the cycle, some software, hardware, and internet companies have grown to rank among the world’s most valuable companies that many investors want to own in their portfolios.
2022
Due to high inflation, the Federal Reserve has raised interest rates six times in 2022 alone and many analysts expect the U.S. central bank to raise rates further.
Although October’s core inflation was lower than expected, San Francisco Federal Reserve President Mary Daly said in mid November that she expects interest rates to rise at least one percentage point or potentially more before the Federal Reserve pauses to evaluate the inflation fight.
With rising interest rates, Treasury rates have increased substantially and capital has moved from big tech stocks into Treasuries as a result. With the capital flows, many big tech stocks are down substantially year to date. If the economy slows more than expected in the future, there could be even more downside in the near term.
Given the uncertainty, it could be a good idea for long term investors to own a well diversified portfolio of stocks across many different sectors.
Cliff Asness of AQR Capital Management
Methodology
For our list of Billionaire Cliff Asness’ Top 10 Technology Stock Picks, we selected 10 technology stocks among AQR Capital Management’s top equity holdings according to 13F filings as of Q3 2022.
We ranked them based on AQR Capital Management’s stake value in the stocks at the end of September.
Billionaire Cliff Asness’ Top 10 Technology Stock Picks
10. Texas Instruments Incorporated (NASDAQ:TXN)
AQR Capital Management’s Stake Value as of 9/30: $200,116,000
Percentage of AQR Capital Management’s 13F Portfolio as of 9/30: 0.48%
AQR Capital Management cut its position in Texas Instruments Incorporated (NASDAQ:TXN) by 10% to end the quarter with a stake worth around $200 million. Since September 30, shares of the semiconductor company have rallied thanks to the broader market rally despite the company’s fourth quarter guidance being weaker than expected.
Baron Funds commented on Texas Instruments Incorporated (NASDAQ:TXN) in a Q3 2022 investor letter,
Shares of Texas Instruments Incorporated (NASDAQ:TXN), the leading global analog semiconductor company, rose 1% during the quarter after the company reported strong financial results with revenue growth of 14% year-over-year, operating profit growth of 23%, and operating margins of 52%. While the level of uncertainty over near-term revenue and free-cash-flow trends has risen due to a potential macro slowdown and supply-chain normalization, Texas Instruments has a long history of growing free-cashflow-per-share over full-market cycles to drive shareholder value. We remain investors and believe that Texas Instruments will benefit from the growth in semiconductor content across a broadening set of end-markets and applications. In addition, we believe that the company will be able to sustain its competitive advantages for the long term, underpinned by its manufacturing technology and process, its broad product portfolio, the reach of its go-to-market organization, and the diversity and longevity of its products.
Alongside Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), Texas Instruments Incorporated (NASDAQ:TXN) is one of billionaire Cliff Asness’ AQR Capital Management’s top tech holdings at the end of Q3 2022.
9. Arrow Electronics, Inc. (NYSE:ARW)
AQR Capital Management’s Stake Value as of 9/30: $207,532,000
Percentage of AQR Capital Management’s 13F Portfolio as of 9/30: 0.5%
Arrow Electronics, Inc. (NYSE:ARW) is one of AQR Capital Management’s largest tech positions given the fund’s stake value of over $207 million at the end of September. Arrow Electronics, Inc. (NYSE:ARW), which provides products and services to industrial and commercial users of electronic components and enterprise computing solutions, hasn’t done well in 2022 with shares down 19.5% year to date. Nevertheless, Arrow Electronics, Inc. (NYSE:ARW) shares have increased since the end of Q3 thanks to the broader market rally.
8. Cisco Systems, Inc. (NASDAQ:CSCO)
AQR Capital Management’s Stake Value as of 9/30: $335,677,000
Percentage of AQR Capital Management’s 13F Portfolio as of 9/30: 0.81%
AQR Capital Management raised its position in Cisco Systems, Inc. (NASDAQ:CSCO) by 22% to end the quarter with a stake of over $335 million in the computer networking giant. For Q1, Cisco Systems, Inc. (NASDAQ:CSCO) reported adjusted EPS of $0.86 on sales of $13.6 billion versus the consensus of $0.84 on sales of $13.31 billion. For FY23, Cisco Systems, Inc. (NASDAQ:CSCO) sees adjusted EPS of $3.51-$3.58, up from the previous $3.49-$3.56.
7. Meta Platforms, Inc. (NASDAQ:META)
AQR Capital Management’s Stake Value as of 9/30: $356,988,000
Percentage of AQR Capital Management’s 13F Portfolio as of 9/30: 0.87%
Given its substantial year to date decline, Meta Platforms, Inc. (NASDAQ:META) is no longer among the top 10 most valuable companies in the world. Nevertheless, Meta Platforms, Inc. (NASDAQ:META) is among the top 10 biggest positions for AQR Capital Management’s 13F equity portfolio at the end of Q3 given the fund’s stake of over $356 million in the social media giant. Meta Platforms, Inc. (NASDAQ:META) is facing competition from TikTok but still has long term growth potential.
6. Tesla, Inc. (NASDAQ:TSLA)
AQR Capital Management’s Stake Value as of 9/30: $381,898,000
Percentage of AQR Capital Management’s 13F Portfolio as of 9/30: 0.93%
Tesla, Inc. (NASDAQ:TSLA) shares have declined recently due to CEO Elon Musk’s purchase of Twitter. Given the distractions, some long term Tesla, Inc. (NASDAQ:TSLA) shareholders have probably taken profits given that the stock has still rallied substantially over the last 10 years. As for AQR Capital Management, however, the fund increased its position in Tesla, Inc. (NASDAQ:TSLA) by 327% in Q3 to end the quarter with a stake worth almost $382 million.
Like Tesla, Inc. (NASDAQ:TSLA), Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) are top tech holdings of billionaire Cliff Asness’ AQR Capital Management at the end of the third quarter.
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Disclosure: None. Billionaire Cliff Asness’ Top 10 Technology Stock Picks is originally published on Insider Monkey.
