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 Netflix, Inc. (NASDAQ:NFLX) 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 home theater with family members enjoying streaming content together.
Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders as of Q4: 144
Arrowstreet Capital’s Equity Stake: $2.05 Billion
Netflix, Inc. (NASDAQ:NFLX) is a leading global streaming service that provides a diverse array of movies, TV shows, and original productions to millions of subscribers worldwide. The company achieved record highs after delivering a strong fourth-quarter earnings report, surpassing expectations for subscriber growth, revenue, and profitability. In Q4 2024, Netflix reported earnings of $4.27 per share, marking a 102% increase from the previous year, while revenue climbed 16% to reach $10.25 billion. The platform gained 18.91 million new subscribers during the quarter, exceeding Wall Street estimates and bringing its total subscriber count to 301.63 million. For 2025, Netflix projects a 13% revenue increase, reaching $44 billion.
Immediately following the outstanding Q4 results, Netflix, Inc. (NASDAQ:NFLX)’s stock surged 18%, as analysts voiced confidence in the company’s 2025 growth potential, upcoming content slate, and continued dominance in the streaming industry. The company expects revenue growth to be driven by increased user engagement, organic subscriber expansion, and higher average revenue per user due to recent price adjustments.
However, Netflix, Inc. (NASDAQ:NFLX) shares experienced a sharp decline on March 7, falling 4.5% after an 8% drop the previous day, reducing the company’s market capitalization by approximately $40 billion to $375 billion. The downturn followed a report from MoffettNathanson analyst Robert Fishman, who warned that while Netflix may continue to see subscriber growth in the near term due to its content lineup and ad-supported tier, the impact of its password-sharing crackdown is expected to diminish. Despite this decline, the stock remains up 46% since March 2024 and has risen 1% year-to-date, even after an 11% drop in the past 30 days. The company saw a surge in shares following its January earnings report, which revealed nearly 19 million new subscribers in Q4 2024. In response to these strong results, Guggenheim Partners’ Michael Morris raised Netflix, Inc. (NASDAQ:NFLX)’s 12-month price target from $950 to $1,100, citing the anticipated return of hit series like Stranger Things and Squid Game in 2025, as well as the continued growth of Netflix’s ad-supported business.
RiverPark Large Growth Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q4 2024 investor letter:
“Netflix, Inc. (NASDAQ:NFLX): NFLX was a top contributor in the fourth quarter powered by a 3Q earnings report that included stronger-than-expected revenue and operating income, solid subscriber additions, and positive forward commentary. Anti-password sharing and ad tier initiatives continue to drive subscriber growth while improving revenue per user trends, from recent price increases, drive margin expansion. The company was optimistic about future revenue growth, margin expansion, free cash flow generation and future return of capital programs.
The recent re-acceleration of subscriber growth, plus price increases on premium memberships and a stabilization of content investments, should position the company for low double digit annual revenue growth over the next few years while driving the operating margin to more than 25%. We also believe that the stabilization of content spend should allow the company to continue to scale its free cash flow.”
Overall, NFLX ranks 5th on our list of top stocks to buy from Arrowstreet Capital’s portfolio. While we acknowledge the potential for NFLX 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 NFLX 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.