In this article, we discuss the top 10 stock picks in Cliff Asness’ Portfolio.
Investment management guru Cliff Asness is a renowned name in the world of hedge funds and finance. He is the founder, managing principal and chief investment officer at the Connecticut-based hedge fund, AQR Capital Management. Asness earned his B.S. in Economics from the Wharton School, and his B.S. in Engineering from the Moore School of Electrical Engineering at the University of Pennsylvania, graduating summa cum laude in both. He received his M.B.A., and later, his Ph.D. in Finance from the University of Chicago. Prior to co-founding AQR Capital Management, Cliff Asness served as managing director and director of quantitative research for the Asset Management Division of The Goldman Sachs Group.
Some of the top stocks present in the investment portfolio of AQR Capital Management at the end of the second quarter of 2021 include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Facebook, Inc. (NASDAQ:FB), among others discussed in detail below.
Cliff Asness of AQR Capital Management
Our Methodology
With this background in mind, let us now look towards the top 10 stock picks in Cliff Asness’ portfolio. We made use of AQR Capital Management’s 13F portfolio for the second quarter for this analysis.
Why should we pay attention to Cliff Asness’ stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Cliff Asness’ Portfolio: Top 10 Stock Picks
10. The Procter & Gamble Company (NYSE:PG)
AQR Capital Management’s Stake Value: $536.8 million
Percentage of AQR Capital Management’s 13F Portfolio: 0.92%
Number of Hedge Fund Holders:
The Procter & Gamble Company is a multinational consumer goods corporation that provides household products and packaged goods. The Ohio-based company ranks tenth on our list of the top 10 stock picks in Cliff Asness’ portfolio.
On October 5, BofA analyst Bryan Spillane initiated coverage of The Procter & Gamble Company with a Buy rating and $160 price target on the company’s shares.
AQR Capital Management currently holds over 3.98 million shares of the company. These shares amount to over $536.8 million and represent 0.92% of fund’s total investment portfolio value. As of the end of the second quarter of 2021, 68 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Procter & Gamble Company.
9. Thermo Fisher Scientific Inc. (NYSE:TMO)
AQR Capital Management’s Stake Value: $536.9 million
Percentage of AQR Capital Management’s 13F Portfolio: 0.92%
Number of Hedge Fund Holders: 87
Thermo Fisher Scientific Inc. (NYSE:TMO) is a Massachusetts-based company that operates as a provider of scientific instruments, reagents and consumables, and software services. The company ranks ninth on the list of the top 10 stock picks in Cliff Asness’ portfolio.
As of the end of the second quarter, 87 hedge funds tracked by Insider Monkey reported owning stakes in Thermo Fisher Scientific Inc.. The total worth of these stakes is $7.39 billion. This shows the hedge fund sentiment is positive for the company as 79 funds had stakes in the company in the previous quarter, having a total worth of $6.25 billion.
On September 23, Goldman Sachs analyst Matthew Sykes upgraded Thermo Fisher Scientific Inc. stock to Conviction Buy from Buy, raising the price target to $690 from $600.
In its Q2 2021 investor letter, ClearBridge Investments mentioned Thermo Fisher Scientific Inc.. Here is what they said:
“Two additional names in the health care sector in the quarter, partially funded with a sale, made strong contributions and helped push our relative exposure to the sector from underweight to overweight. We added Thermo Fisher Scientific to increase our exposure to health care tools, which has been an attractive and core segment within health care. Thermo Fisher’s instruments are used to monitor and protect air, water, and food quality, and the company has strong long-term fundamentals, a top-tier management team and a diversified business.”
8. Target Corporation (NYSE:TGT)
AQR Capital Management’s Stake Value: $563.9 million
Percentage of AQR Capital Management’s 13F Portfolio: 0.97%
Number of Hedge Fund Holders: 66
Target Corporation (NYSE:TGT) is a retail corporation that operates large-scale food and merchandise stores. Ranked eighth on the list of the top 10 stock picks in Cliff Asness’ portfolio, Target Corportation has a market capitalization of $124.90 billion.
According to the recent 13F Filings, AQR Capital Management holds 2.33 million shares of Target Corporation, amounting to $563.9 million in worth.
7. Alibaba Group Holding Limited (NYSE:BABA)
AQR Capital Management’s Stake Value: $763.4 million
Percentage of AQR Capital Management’s 13F Portfolio: 1.32%
Number of Hedge Fund Holders: 146
In the second quarter of 2021, Cliff Asness held 3.36 million shares of Alibaba Group Holding Company (NYSE:BABA), amounting to $763.4 million in worth. These shares represented 1.32% of his investment firm’s total portfolio value. At the end of the second quarter of 2021, 146 hedge funds in the database of Insider Monkey held stakes worth $16.79billion in Alibaba Group Holding Limited (NYS:BABA).
On September 6, KGI Securities began coverage of Alibaba Group Holding Limited with a Neutral rating and $26.34 price target on its shares.
In the Q2 2021 investor letter of Polen Capital Management, the fund mentioned Alibaba Group Holding Limited. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
6. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
AQR Capital Management’s Stake Value: $818.4 million
Percentage of AQR Capital Management’s 13F Portfolio: 1.41%
Number of Hedge Fund Holders: 64
According to the Q2 13F Filings, AQR Capital Management holds over 6.8 million shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), worth $818.3 million and representing 1.41% of the investment fund’s portfolio value. By the end of the second quarter of 2021, 64 hedge funds out of the 873 tracked by Insider Monkey held stakes in Taiwan Semiconductor Manufacturing Company, worth roughly $10.4 billion, down from 76 hedge funds in the preceding quarter with stakes worth approximately $10.8 billion.
In the Q2 2021 investor letter of Wedgewood Partners, the fund mentioned Taiwan Semiconductor Manufacturing Company Limited. Here is what they said:
“We initiated a new position in Taiwan Semiconductor Manufacturing, the largest contract manufacturer of logic semiconductors in the world. The Company has invested prodigious amounts of capital ($17 billion in 2020 alone and as much as $28 billion this year) over the past several years, at returns that suggest to us a very steep and sustainable competitive advantage. The Company has a very long runway to grow its business at a double-digit rate, driven by several favorable industry and company-specific trends including semiconductor architectural design changes, increasing manufacturing process complexity, and the proliferation of more logic semiconductors in more devices.
With over 50% market share, more than 3X that of its next largest competitor, Samsung, the Company dominates the contract foundry industry for logic semiconductors (source: Trendforce). Taiwan Semi has erected a formidable competitive barrier with its manufacturing capacity, as the Company carries over $150 billion in gross PPE (property, plant, and equipment) on its balance sheet. This would put the Company in the top echelons of invested tangible capital, globally. Further, the Company has committed to a multi-year, $100 billion capital investment program aimed at building out some of the only capacity capable of manufacturing leading-edge, sub 7 nanometers (nm) resolution integrated circuits. While semiconductor cycles are notoriously boom-bust, the Company has already secured enough demand to drive very high utilization rates for this new bleeding-edge capacity much earlier compared to previous capacity rollouts…” (Click here to see the full text)
5. Alphabet Inc. (NASDAQ:GOOG)
AQR Capital Management’ Stake Value: $921.7 million
Percentage of AQR Capital Management’s 13F Portfolio: 1.59%
Number of Hedge Fund Holders: 155
As of the end of the June quarter, 155 hedge funds out of the 873 tracked by Insider Monkey held stakes in Alphabet Inc. (NASDAQ:GOOG). According to the recent 13F Filings, AQR Capital Management holds 378,509 shares in the company. These shares are worth more than $921.7 million and account for 1.59%% of the fund’s total investment portfolio.
In its Q2 2021 investor letter, Mawer Investment Management named Alphabet Inc. among the companies that reported strong results. Here is what the fund said:
“Many higher growth companies reported strong results amid the pick-up in broad economic activity including Alphabet. These higher growth companies tend to have increased sensitivity to a change in discount rates and were supported as long-term interest rates stabilized over the period.”
4. Facebook, Inc. (NASDAQ:FB)
AQR Capital Management’ Stake Value: $1 billion
Percentage of AQR Capital Management’s 13F Portfolio: 1.73%
Number of Hedge Fund Holders: 266
As of the end of the second quarter, 266 hedge funds tracked by Insider Monkey reported owning stakes in Facebook, Inc.. The total worth of these stakes is $42.34 billion. This shows the hedge fund sentiment is positive for the social media company as 257 funds had stakes in the company in the previous quarter, with a total worth of $40.96 billion.
As of Q2 2021, Cliff Asness’ AQR Capital Management holds over 2.88 million shares of Facebook, Inc., amounting to more than $1 billion in worth and representing 1.73% of the fund’s total portfolio value.
On September 30, RBC Capital analyst Brad Erickson initiated coverage of Facebook, Inc. with an Outperform rating alongside a $425 price target on the company’s shares.
First Eagle Investment Management, an investment management firm, In its Q2 2021 investor letter stated that Facebook, Inc. was among the leading contributors in the fund’s portfolio for the quarter. Here is what the fund said:
“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
AQR Capital Management’ Stake Value: $1.2 billion
Percentage of AQR Capital Management’s 13F Portfolio: 2.06%
Number of Hedge Fund Holders: 271
There were 271 hedge funds in the database of Insider Monkey that held stakes in Amazon.com, Inc. worth $60.49 billion in the second quarter of 2021, compared to 243 funds in the first quarter with total stakes amounting to approximately $50.4 billion. Cliff Asness’ hedge fund held 347,736 shares in the company by the end of the quarter. These shares are valued at $1.19 billion and account for 2.06% of his fund’s total investment portfolio.
On October 21, Baird analyst Colin Sebastian maintained an Outperform rating, alongside a $4,000 price target on Amazon.com, Inc. shares.
Madison Funds, in its Q3 2021 investor letter, mentioned Amazon.com, Inc. (NASDAQ:AMZN). Here is what the fund had to say:
“We did add a modest new position weight to the portfolio in the quarter in Amazon.com, Inc. stock (AMZN). We acknowledge that many aspects of Amazon’s merit as an investment are well appreciated. However, our work leads us to conclude that shares are attractive. Leadership positions in both e-commerce and cloud computing provide the company with significant durable competitive advantages in industries that we think can produce above average growth over the next decade. Over the past year, AMZN shares have trailed the market as investors debate near-term growth prospects following the pandemic-induced e-commerce demand. Additionally, margins have been depressed due to Amazon’s unprecedented increases in spending to build out fulfillment and in-house logistics capabilities – Amazon will build out more square footage this year and last than it did cumulatively over the previous 10 years, more than doubling its in-house delivery capacity. We like the investments Amazon is making and believe they will further advantage the company relative to other retailers, making it nearly impossible for competitors to match the same level of delivery speed and convenience. With its large and frequently engaged customer base, Amazon has multiple mechanisms to make money, including selling advertising and enhanced subscription services. Within the cloud business, we forecast Amazon Web Services (AWS) leveraging its strengths in Infrastructure-as-a-service (IaaS) to move into higher value segments of cloud computing (such as platform-as-a-service: PaaS), allowing the company to continue outgrowing the overall IT sector with strong profitability. While Amazon shares have performed extremely well over the long-term, we think near-term concerns about whether Amazon will earn a return on its accelerated investments provide an opportunity now for investors willing to look through the investment period. Our view is that the investments likely earn strong returns and extend Amazon’s competitive advantages and aboveaverage growth.”
2. Microsoft Corporation (NASDAQ:MSFT)
AQR Capital Management’ Stake Value: $1.73 billion
Percentage of AQR Capital Management’s 13F Portfolio: 2.99%
Number of Hedge Fund Holders: 238
On October 20, Wedbush analyst Daniel Ives raised his price target on Microsoft Corporation to $375 from $350, and kept an Outperform rating on the shares of the company.
By the end of the second quarter of 2021, 238 hedge funds out of the 873 tracked by Insider Monkey held stakes in Microsoft Corporation, worth roughly $62.46 billion, compared to 251 hedge funds in the previous quarter, with stakes worth approximately $58.9 billion.
As of the end of the June quarter, AQR Capital Management reported owning over 6.4 million shares in Microsoft Corporation, worth more than $1.73 billion and representing 2.99% of the fund’s total portfolio value.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
1. Apple Inc. (NASDAQ:AAPL)
AQR Capital Management’ Stake Value: $1.98 billion
Percentage of AQR Capital Management’s 13F Portfolio: 3.42%
Number of Hedge Fund Holders: 138
Apple Inc. is placed first on our list of the top 10 stock picks in Cliff Asness’ portfolio. The California-based company operates as a technology firm with a large stake in the consumer electronics business.
By the end of the second quarter of 2021, Cliff Asness held over 14.5 million shares in Apple Inc., worth more than $1.98 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
You can also take a peek at Forget Tesla (TSLA): 10 Cheap EV Stocks to Buy Now and 15 Best Consumer Discretionary Stocks to Buy Now.
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This article is originally published at Insider Monkey.
