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 whereMicrosoft Corporation (NASDAQ:MSFT) 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 development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders as of Q4: 317
Arrowstreet Capital’s Equity Stake: $6.54 Billion
Microsoft Corporation (NASDAQ:MSFT) posted $69.63 billion in Q4 revenue, surpassing expectations and reflecting a 12.27% year-over-year increase. Its earnings per share (EPS) of $3.23 also exceeded analyst forecasts of $3.12, reinforcing the company’s solid market position and ongoing profitability. Beyond financial performance, the company continues to lead in technological innovation. In February 2025, it made a major advancement in quantum computing by developing a topological qubit, a breakthrough with potential applications in artificial intelligence, medicine, and cryptography. This achievement strengthens Microsoft’s role as a global leader in quantum research and enhances its long-term growth potential.
Microsoft Corporation (NASDAQ:MSFT) shares declined on Monday, March 10, as investor concerns over a potential recession grew amid ongoing trade policy uncertainty and tariff changes. In February, President Donald Trump announced a 25% tariff on Canadian and Mexican goods and a 10% tariff on Chinese imports. While tariffs on Canada and Mexico were temporarily postponed for a month, those on Chinese goods took effect as scheduled. By March 4, Trump proceeded with the Canadian and Mexican tariffs and introduced an additional 10% tariff on Chinese imports. The fluctuating trade policies have created uncertainty around pricing stability and supply chains, prompting some investors to offload stocks, particularly in the technology sector, where companies like Microsoft Corporation (NASDAQ:MSFT) rely on global markets for production and distribution. As a result, growth stocks may face increased caution from investors. Trump has acknowledged the possibility of a recession, framing it as a “period of transition” due to his administration’s economic policies.
The company remains a strong investment choice due to its consistent revenue growth, exceeding expectations with a 12.27% year-over-year increase, and its leadership in cutting-edge technologies like quantum computing and artificial intelligence. Despite short-term market volatility caused by trade uncertainties, Microsoft Corporation (NASDAQ:MSFT)’s solid financials, innovation-driven expansion, and dominant market position make it a resilient stock with long-term growth potential.
Mairs & Power Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q4 2024 investor letter:
“Unlike the dot-com companies that operated at the turn-of-the-century, many of today’s technology companies are established businesses with significant cash flows. We have argued, and continue to argue, that many of these investments are perfectly aligned with our investments process in that they embody durable competitive advantages, above-average growth prospects, and excellent management teams.
A perfect example is Microsoft Corporation (NASDAQ:MSFT), which has grown to become the largest holding in the Growth Fund. Microsoft has a near monopoly on the office software productivity market with its Microsoft Office Suite. The company’s Azure platform is a leader in cloud computing and has been steadily gaining share. Thanks to its Office and Azure products, the company is deeply embedded within many enterprise IT ecosystems. Therefore, it should be well-positioned to expand its presence within its customer base, as it rolls out premium-price AI solutions. The company is not resting on its laurels and plans on spending an astounding $80 billion in 2025 to build out AI data centers.”
Overall, MSFT ranks 3rd on our list of top stocks to buy from Arrowstreet Capital’s portfolio. While we acknowledge the potential for MSFT 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
