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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.

Ellica /

Ellica /

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

Peter Rathjens, Bruce Clarke And John Campbell
Peter Rathjens, Bruce Clarke And John Campbell
Arrowstreet Capital

#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.

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#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.

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