Arrowstreet Capital Goes Heavily Bullish & Bets Big on These Stocks in Q4

Arrowstreet Capital is a Boston, Massachusetts-based quantitative hedge fund founded by Peter Rathjens, Bruce Clarke and John Campbell in 1999. Apart from its headquarters in Boston the firm also runs two additional offices in London and Sydney and boasted of assets under management of nearly $54 billion, as of September 30, 2015. Arrowstreet Capital recently submitted its 13F with the Securities and Exchange Commission (SEC) for the reporting quarter  ending September 30. The filing revealed that the value of its US equity portfolio more than doubled to $38.77 billion at the end of September from almost $17.7 billion at the end of June. According to the filing, during the third quarter the fund initiated stake in 483 stocks and made additional purchases in 840 stocks, while it sold its entire stake in just one stock and reduced its holding in only five stocks. In this article we will be analyzing the fund’s top five largest holding going into the fourth quarter.

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#5 Novo Nordisk A/S (ADR)(NYSE:NVO)

Shares Owned by Arrowstreet Capital (as of September 30): 6.86 million shares

Value of Holding (as of September 30): $372.269 Million

Although Arrowstreet Capital added an additional 1.12 million shares of Novo Nordisk A/S (ADR)(NYSE:NVO) during the third quarter, the healthcare behemoth continued to remain its fifth largest holding at the end of September. Shares of Novo Nordisk A/S (ADR)(NYSE:NVO) have corrected significantly from their peak in early-August, but are still trading up more than 28% year-to-date. On November 8, it was reported that the company’s diabetes drug ‘Victoza’ had failed in tests conducted to improve clinical stability or delay death in patients suffering from advanced heart failure. For the third quarter of fiscal 2015, the company delivered EPS of $0.49 on revenue of $4.0 billion. Analysts had expected it to report EPS of $0.47 on revenue of $4 billion. Israel Englander‘s Millennium Management initiated a stake in the company during the second quarter by purchasing 415,737 shares.

#4 Starbucks Corporation (NASDAQ:SBUX)

Shares Owned by Arrowstreet Capital (as of September 30): 6.77 million shares

Value of Holding (as of September 30): $385.182 Million

Following the age old mantra of adding to winning trades, Arrowstreet Capital increased its stake in Starbucks Corporation (NASDAQ:SBUX) by 129% or almost 3.82 million shares during the July-September period. Shares of the coffee retail chain have an unprecedented rise of more than 50% this year, 6.29% of which came during the volatile third quarter alone. Starbucks Corporation (NASDAQ:SBUX) reported its third quarter earnings on October 29, declaring EPS of $0.43 on revenue of $4.91 billion, versus Street’s estimate of EPS of $0.43 on revenue of $4.90 billion. On November 5, analysts at Argus reiterated their ‘Buy’ rating on the stock and upped their price target on it to $72 from $68. Steve Leonard‘s Pacifica Capital Investments doubled its stake in the company during the April-June period to 578,948 shares.

#3 Comcast Corporation (NASDAQ:CMCSA)

Shares Owned by Arrowstreet Capital (as of September 30): 7.3 million shares

Value of Holding (as of September 30): $415.041 Million

After increasing its stake in Comcast Corporation (NASDAQ:CMCSA) by 12% during the second quarter, Arrowstreet Capital again added nearly 20% or over 1.2 million shares of the company to its portfolio during the third quarter. Shares of Comcast Corporation (NASDAQ:CMCSA) have more or less remained in the $55-$65 range throughout the year and currently trade up 5.76% year-to-date. Recent reports suggest that the company is planning to give another shot to mobile virtual network operator (MVNO) business, which it had launched and folded earlier. On October 27, the company reported its fiscal 2015 third quarter earnings. While analysts had estimated that it would report EPS of $0.80 on revenue of $17.94 billion, Comcast delivered EPS of $0.80 on revenue of $18.67 billion. On November 10, analysts at SunTrust initiated coverage on Comcast’s stock with ‘Neutral’ rating and $66 price target. Jacob Rothschild‘s RIT Capital Partners initiated a stake in the company by purchasing over 1 million shares during the second April-June period.

#2 Bank of America Corp (NYSE:BAC)

Shares Owned by Arrowstreet Capital (as of September 30): 27.65 million shares

Value of Holding (as of September 30): $430.895 Million

Owing to Arrowstreet Capital more than doubling its stake by adding an additional 13.89 million shares, Bank of America Corp (NYSE:BAC) jumped seven places quarter-over-quarter to become the fund’s second largest equity holding at the end of the third quarter. Though the shares of the company have remained considerably volatile throughout 2015, they currently trade flat for the year. The stock of Bank of America Corp (NYSE:BAC) have had a terrific rise of more than 12% since it reported its fiscal 2015 third quarter results on October 14. By reporting EPS of $0.37 on revenue of $20.91 billion, the bank managed to beat the Street’s estimate of EPS of $0.33 on revenue of $20.77 billion by a wide margin. Experts believe that if the Fed raises rates in December, it would help the stock of Bank of America to rise in the near to medium-term, alongside the stocks of other lenders. John Paulson‘s Paulson & Co reduced its stake in the bank by 15% to 18.66 million shares during the second quarter.

#1 Apple Inc. (NASDAQ:AAPL)

Shares Owned by Arrowstreet Capital (as of September 30): 6.9 million shares

Value of Holding (as of September 30): $761,059 Million

Finally, even after disposing 27,170 shares of Apple Inc. (NASDAQ:AAPL) during the third quarter, the smartphone giant remained the fund’s top stock pick at the end of that period. The $120 figure is turning out to be an important pivot for the stock this year as after breaking above it in February the stock remained above that level till July, but hasn’t been able to re-capture it convincingly ever since it went below this level in early-August. The company announced today that it would be further expanding its Investment in Ireland and plans to hire as many as 1,000 employees at its facility in the country. On November 10, analysts at Credit Suisse released a note in which they highlighted that the company is reducing the order for iPhone 6s components possibly on the back of weak demand. For the third quarter of fiscal 2015, Apple Inc. (NASDAQ:AAPL) reported EPS of $1.96 on revenue of $51.5 billion, which was better than EPS of $1.88 on revenue of $51.02 billion expected by analysts. With an ownership of over 52.76 million shares of the company, legendary activist investor Carl Icahn’s Icahn Capital LP was the largest shareholder of the company at the end of June among the funds covered by Insider Monkey.

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