In this article, we discuss Cliff Asness’ short position on AMC and his top 10 stock picks.
2022 is not the year of meme stocks, the darlings of the year 2020. Soaring inflation and high interest rates have pushed investors away from speculative bets in such a drastic fashion over the past few months that discussions round meme stocks, once a topic of huge controversy on Wall Street, are now limited to a few Reddit forums. However, Wall Street titans are using this downward spiral to their advantage, shorting some popular meme stocks. Cliff Asness of AQR Capital Management, a growth-focused fund, recently joined this group as well.
In an interview with news platform CNBC, the chief of AQR Capital Management revealed that his firm held a small short position on AMC Entertainment Holdings, Inc. (NYSE:AMC), the Kansas-based entertainment firm and one of the two most popular meme stocks, comprising 12 basis points of the overall portfolio. Asness claimed that the position was so small that it would not bear on the overall performance of the fund, but outlined his dislike for the fundamentals of the stock, noting it was “terrible on everything we care about”.
Asness went even further to highlight his short, adding that AMC Entertainment Holdings, Inc. stock was “super expensive, super unprofitable and super high beta and volatility”. He dared all “meme stock maniacs” to try and hurt him, an apparent reference to the retail traders that have pledged to act as spoiler to hedge fund short-sellers with regards to meme stocks. In early 2020, these retail traders had banded together to inflict losses worth billions to some hedge funds in a similar short-selling scheme.
Asness joins a growing list of hedge fund managers who have been shorting AMC Entertainment Holdings, Inc. stock. According to a database maintained by Insider Monkey, prominent funds like Citadel Investment Group of Ken Griffin, 683 Capital Partners of Ari Zweiman, Antara Capital of Himanshu Gulati, Leonard Green & Partners of Leonard Green, Sandler Capital Management of Andrew Sandler, and a host of other funds were also shorting the stock at the end of the first quarter of 2022.
Asness manages an equity portfolio at his hedge fund worth over $52.6 billion at the first quarter of 2022. The top ten holdings in the portfolio comprise over 16% of the total portfolio. Between January and March this year, Asness made new purchases in 187 stocks, additional purchases in over a 1,000, sold out of 167, and reduced holdings in over 900 stocks. Some of the top stocks in the AQR Capital Management portfolio include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).
Our Methodology
These were picked from the investment portfolio of AQR Capital Management at the end of the first quarter of 2022. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey was used to quantify the popularity of each stock in the hedge fund universe.
Cliff Asness of AQR Capital Management
10. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 101
Thermo Fisher Scientific Inc. (NYSE:TMO) markets analytical instruments, specialty diagnostics, and laboratory products. Latest data shows that AQR Capital Management owned over 710,000 shares of Thermo Fisher Scientific Inc. at the end of the first quarter of 2022 worth $419 million, representing 0.79% of the portfolio. The company has been in the AQR portfolio since the third quarter of 2017. In the first three months of 2022, the fund decreased its stake in the company by around 25% compared to filings for the fourth quarter of 2021.
On April 25, Wells Fargo analyst Timothy Daley downgraded Thermo Fisher Scientific Inc. stock to Underweight from Equal Weight with a price target of $525, noting that the valuation of the stock was expensive relative to historical premium.
At the end of the first quarter of 2022, 101 hedge funds in the database of Insider Monkey held stakes worth $7.9 billion in Thermo Fisher Scientific Inc., up from 96 in the preceding quarter worth $9.4 billion.
Just like Apple Inc., Microsoft Corporation, and Alphabet Inc., Thermo Fisher Scientific Inc. is one of the stocks on the radar of elite hedge funds.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Thermo Fisher Scientific Inc. was one of them. Here is what the fund said:
“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of Thermo Fisher Scientific Inc., a leading health care tools company, a leading provider of fertility benefit management services to self-insured employers that offers a rare win-win-win for employers, employees, health systems, and doctors, with clear savings and quality improvements.”
9. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 72
The Procter & Gamble Company markets branded consumer packaged goods. Securities filings show that AQR Capital Management owned over 3 million shares of The Procter & Gamble Company at the end of March 2022 worth $461 million, representing 0.87% of the portfolio. AQR has steadily reduced its stake in the firm since late 2020, shedding the stock in all four quarters of 2021.
On June 1, Deutsche Bank analyst Steve Powers maintained a Buy rating on The Procter & Gamble Company stock and lowered the price target to $171 from $177, noting that the stock had outperformed in a difficult environment in the past six months.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in The Procter & Gamble Company with 9.9 million shares worth more than $1.5 billion.
8. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson makes and sells healthcare products. Regulatory filings reveal that AQR Capital Management owned over 2.9 million shares of Johnson & Johnson at the end of the first quarter of 2022 worth $528 million, representing 1% of the portfolio. The company has been in the AQR portfolio since the third quarter of 2017. AQR reduced its stake in the firm by 1% in the first quarter of 2022 compared to fourth quarter data.
On May 23, SVB Leerink analyst David Risinger assumed coverage of Johnson & Johnson stock with an Outperform rating and a price target of $200, lauding the ability of the firm to deliver consistent earnings growth and value-enhancing M&A.
At the end of the first quarter of 2022, 83 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in Johnson & Johnson, the same as in the previous quarter worth $7.3 billion.
7. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 79
Pfizer Inc. (NYSE:PFE) makes and sells biopharma products. Latest 13F filings show that AQR Capital Management owned over 10.7 million shares of Pfizer Inc. at the end of March 2022 worth $554 million, representing 1.05% of the portfolio. The firm has been in the AQR portfolio since the third quarter of 2017. AQR increased its stake in the firm by 57% in the first quarter of 2022 compared to fourth quarter filings.
On May 23, SVB Leerink analyst David Risinger initiated coverage of Pfizer Inc. stock with a Market Perform rating and a price target of $55, noting that there was optimism around the initiatives of the management to boost innovation at the firm.
At the end of the first quarter of 2022, 79 hedge funds in the database of Insider Monkey held stakes worth $4 billion in Pfizer Inc., compared to 83 in the preceding quarter worth $5 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Pfizer Inc. was one of them. Here is what the fund said:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer Inc. had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.”
6. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 200
Meta Platforms, Inc. (NASDAQ:META) is a tech firm that owns and runs social media platforms. Latest 13F filings show that AQR Capital Management owned 2.9 million shares of Meta Platforms, Inc. at the end of March 2022 worth $658 million, representing 1.24% of the portfolio of the fund. The firm has been in the AQR portfolio since the third quarter of 2017. The hedge fund led by Asness increased its stake in the tech firm by 48% in the first three months of 2022 compared to filings for the fourth quarter of 2021.
On June 8, Piper Sandler analyst Thomas Champion maintained a Neutral rating on Meta Platforms, Inc. stock with a price target of $220, noting that the firm was the best in terms of “ad-tech and scale” but faced headwinds from further privacy issues.
At the end of the first quarter of 2022, 224 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Meta Platforms, Inc., compared to 248 in the preceding quarter worth $31 billion.
Along with Apple Inc., Microsoft Corporation, and Alphabet Inc., Meta Platforms, Inc. is one of the stocks that elite investors are monitoring.
In its Q4 2021 investor letter, Boyar Value Group, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. was one of them. Here is what the fund said:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms, Inc. (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 81
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. Latest data shows that AQR Capital Management owned over 6.9 million shares of Taiwan Semiconductor Manufacturing Company Limited at the end of the first quarter of 2022 worth $727 million, representing 1.38% of the portfolio. The company has been in the AQR portfolio since the third quarter of 2017.
On June 21, Loop Capital analyst Charles Park initiated coverage of Taiwan Semiconductor Manufacturing Company Limited stock with a Buy rating and a price target of NT$600, noting the firm was a global leader in the foundry business.
At the end of the first quarter of 2022, 81 hedge funds in the database of Insider Monkey held stakes worth $10.1 billion in Taiwan Semiconductor Manufacturing Company Limited, up from 72 in the preceding quarter worth $10.9 billion.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Taiwan Semiconductor Manufacturing Company Limited was one of them. Here is what the fund said:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited detracted in the first quarter due to rising geopolitical tensions, macroeconomic uncertainties, and concerns over softening demand for consumer electronics. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, and IoT, will allow the company to deliver above its 15% to 20% revenue growth target over the next several years.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is a diversified technology firm with core interests in ecommerce. Securities filings show that AQR Capital Management owned over 234,000 shares of Amazon.com, Inc. at the end of March 2022 worth $763 million, representing 1,44% of the portfolio. AQR has steadily reduced its stake in the firm since the second quarter of 2020, shedding the stock in all four quarters of 2021 as well.
On June 24, Evercore ISI analyst Mark Mahaney maintained an Outperform rating on Amazon.com, Inc. stock and lowered the price target to $180 from $205, noting that retail spending was expected to be lower over the next year.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. with 4 million shares worth more than $13 billion.
In its Q4 2021 investor letter, Mercator International, an asset management firm, highlighted a few stocks and Amazon.com, Inc. was one of them. Here is what the fund said:
“Transformative technologies often generate euphoria. People are excited by the big new thing that is changing the world. We saw this pattern with the boom of westward canal transportation at the dawn of the nineteenth century. Railway stocks similarly attracted large numbers of eager investors a few decades later. Then came the electrification of America, the telephone, and the automobile industry, to name just a few transformative technologies.
The initial euphoric phase always ends with a reality check. Valuations come back to earth. At the end of the cycle, only a few companies remain standing. A shakeout has a way of clarifying the field of opportunities.
For example, readers may recall that when the internet bubble burst two decades ago, Amazon.com, Inc. stock suffered greatly but pet.com was gone. For those investors who had stayed on the sidelines, this was an excellent time to buy Amazon.com, Inc.. The company’s business model had shown its merits and competition was rapidly shrinking. The stock price was now also much more attractive.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Alphabet Inc. is a California-based technology firm. Regulatory filings reveal that AQR Capital Management owned over 311,000 shares of Alphabet Inc. at the end of the first quarter of 2022 worth $867 million, representing 1.64% of the portfolio. The company has been in the AQR portfolio since the third quarter of 2017. AQR reduced its stake in the firm by 5% in the first quarter of 2022 compared to fourth quarter data.
On June 2, Piper Sandler analyst Thomas Champion maintained an Overweight rating on Alphabet Inc. stock and lowered the price target to $2,775 from $2,900, noting that digital ad spend was normalizing after two years.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. with 2.3 million shares worth more than $6.6 billion.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. was one of them. Here is what the fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet Inc., performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet Inc. (Google) again with a margin of safety.”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation is a Washington-based technology company. Latest 13F filings show that AQR Capital Management owned over 5.4 million shares of Microsoft Corporation at the end of March 2022 worth $1.6 billion, representing 3.18% of the portfolio. The firm has been in the AQR portfolio since the third quarter of 2017. AQR decreased its stake in the firm by 7% in the first quarter of 2022 compared to fourth quarter filings.
On June 17, Morgan Stanley analyst Keith Weiss maintained an Overweight rating on Microsoft Corporation stock with a price target of $372, noting that the gaming franchise build of the firm has hit “overdrive” as the firm expands its user base.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation with 27 million shares worth more than $8.5 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an investment management firm, highlighted a few stocks and Microsoft Corporation was one of them. Here is what the fund said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft Corporation which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Apple Inc. is a consumer electronics firm. Latest 13F filings show that AQR Capital Management owned 10.5 million shares of Apple Inc. at the end of March 2022 worth $1.8 billion, representing 3.48% of the portfolio of the fund. The firm has been in the AQR portfolio since the third quarter of 2017. The hedge fund led by Asness decreased its stake in the tech firm by 5% in the first three months of 2022 compared to filings for the fourth quarter of 2021.
On June 22, Bank of America analyst Wamsi Mohan maintained a Buy rating on Apple Inc. stock with a price target of $200, noting that the app store revenue of the firm was growing.
At the end of the first quarter of 2022, 131 hedge funds in the database of Insider Monkey held stakes worth $182 billion in Apple Inc., compared to 134 in the previous quarter worth $186 billion.
In its Q4 2021 investor letter, Berkshire Hathaway highlighted a few stocks and Apple Inc. was one of them. Here is what the fund said:
“Apple Inc. – our runner-up Giant as measured by its yearend market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our “share” of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple Inc. shares, an act we applaud. Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple Inc. products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
You can also take a peek at 10 Companies that Benefit From Crypto Mining and 12 Best Artificial Intelligence Stocks To Invest In Right Now.
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This article is originally published at Insider Monkey.
