Apple Inc. (AAPL), Facebook Inc (FB), Amazon, Alphabet Inc: Quant Models Like Only Two of These Stocks

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Are Apple Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB),, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOGLstocks worth adding to your portfolio? In short the answer is likely yes, since each of these companies is among the leaders in its respective industry. However, each stock is rather expensive and it is not guaranteed that all of them will outperform the market, at least in the short term. There are many ways to analyze a stock, one of which is to see how smart investors are trading it, which is what we do at Insider Monkey. The smartest investors in recent quarters seem to be, well, robots or quant hedge funds.

We track over 700 hedge funds and other institutional investors and analyze every quarter the general sentiment among them towards thousands of stock. One particularly interesting group of investors that we follow are quantitative hedge funds, many of which are some of the largest and best-performing funds on Wall Street. We calculated the returns of some of these funds using data from their publicly available 13F filings, and determined that most quant funds managed to outperform the market even though in some instances their picks were less risky than the broader market. For example, the top five stock picks of Jim Simons’ Renaissance Technologies posted an equal-weighted average gain of 1.17% per month between 2008 and 2012, outperforming the S&P 500 which inched up by 0.29% per month during the same period. When we adjusted returns for known factor returns like size, value, and momentum RenTech’s alpha turned out to be 103 basis points per month. This means this quant hedge fund’s top picks were able to beat the market by almost a percentage point a month by investing in a portfolio of less risky stocks.

Having said that, we have lined up six quantitative hedge funds: Cliff Asness’ AQR Capital ManagementDavid E. Shaw’s D. E. Shaw & Co.Jim Simons’ Renaissance TechnologiesPeter Muller’s PDT Partners, and Neil Chriss’ Hutchin Hill Capital. In a previous article, we have discussed most of these funds, as well as their top stock picks. In this piece, we’ll take a look how these funds traded the aforementioned four stocks: Apple Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB),, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOGL). Most of the quant funds in question own shares of each of these stocks, but based on the size of each position and the changes it underwent during the third quarter, we will try to determine two stocks that could potentially represent the best investments.


Let’s start with Apple Inc. (NASDAQ:AAPL), in which all five of the six quants held shares heading into the fourth quarter, while one fund closed its position between July and September. The largest positions are held by D. E. Shaw & Co. and AQR Capital Management, which disclosed ownership of 6.68 million shares and 6.44 million shares, respectively. Moreover, both funds held Apple Inc. (NASDAQ:AAPL) as their second-largest holding and both increased their exposure to the stock over the quarter, but, while AQR Capital increased it by just 14%, D. E. Shaw boosted it by 178%. Other quants that increased their stakes included PDT Partners, which added 17,200 shares to its stake, taking it to 89,500 shares, while Hutchin Hill Capital added 24,900 shares and held 25,000 shares at the end of September. However, at the same time, we have two funds that limited their exposure to the stock. As stated earlier, one investor that sold all of its shares in Apple is Renaissance Technologies, which had previously owned nearly 1.10 million shares (at the end of June). In addition, Two Sigma Advisors cut its stake by 81% and held just 48,531 shares heading into the fourth quarter. So, from what it looks like the quants that we are discussing in this article are overall bullish on Apple Inc. (NASDAQ:AAPL), which is also supported by our more general data across all hedge funds tracked by us, with the number of investors long Apple jumping to 145 from 116 during the third quarter.

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