We recently compiled a list of the 10 Stocks Dominating a Billionaire Quant’s Investment Strategy. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against the other stocks that are dominating a billionaire quant’s investment strategy.
AQR Capital Management is a global investment management firm, founded by Cliff Asness in 1998, dedicated to delivering positive outcomes for its clients. AQR Capital Management has spent over two decades exploring market forces and applying insights to manage client portfolios effectively and has placed itself at the core of economics, behavioral finance, data, and technology.
Cliff Asness, a renowned figure in finance, is the Founder, Managing Principal, and Chief Investment Officer at AQR Capital Management. He is recognized for his extensive research and contributions to financial literature with many awards to his name including multiple Bernstein Fabozzi/Jacobs Levy Awards, Graham and Dodd Awards, and the prestigious 2020 Fama/DFA Prize for Capital Markets and Asset Pricing. Asness’ career began at Goldman, Sachs & Co., where he served as Managing Director and Director of Quantitative Research before founding AQR. He actively participates in professional organizations and serves on boards such as The Journal of Portfolio Management, Courant Institute of Mathematical Finance at NYU, Q-Group, and The National WWII Museum.
Asness started with a $10 million investment from a small group of investors in 1995 and rapidly expanded the Goldman Sachs Global Alpha Fund using quantitative strategies thereby increasing its assets to over $100 million within months. After Asness left Goldman Sachs in 1998 to establish his own hedge fund, the Alpha Fund continued to grow, reaching assets totaling $12 billion by 2007. Asness, a former doctoral student under Nobel laureate Eugene Fama, saw shifts in market efficiency over his career, through meme stocks and valuation disparities post-pandemic. He believes there’s ongoing potential in value investing, as opposed to less than three years ago when opportunities were more noticeable.
AQR, short for Applied Quantitative Research, operates as a hedge fund managing discretionary assets valued at $119.9 billion as of August 2023, according to their Form ADV filing. Their latest 13F filing for Q2 2023 disclosed a portfolio value $48.4 billion in 13F securities, with a top 10 holdings concentration of 14.42%. AQR manages around $8 billion of its total $99 billion assets under management in an emerging-market equities portfolio, employing a collaborative approach similar to its other funds. This strategy, which diversifies away from the dominance of US stocks, positions AQR alongside industry leaders like Morgan Stanley Investment Management. AQR’s multi-strategy offerings achieved a 13.5% gain year-to-date through April 2024, following a 16% return in 2023. As global interest rates remain elevated, creating opportunities for hedge funds, AQR’s futures-trading strategies have thrived amidst market volatility.
AQR Capital Management is gradually integrating machine-driven strategies aiming to enhance performance and adapt to market dynamics. Despite initial skepticism towards machine learning in investing, AQR has expanded into trend-following strategies, including tracking fundamental signals and venturing into niche markets such as Malaysian palm oil and milk. Speaking at the Bloomberg Invest conference in New York, Asness emphasised that recent improvements in the firm’s performance reflect not only market cycles but also strategic adjustments.
“We let the machine decide more,”
Asness emphasized, noting his confidence in machine-based decision-making over human intuition.
Our Methodology:
Stocks mentioned in this article were picked from the investment portfolio of AQR Capital Management at the end of the third quarter of 2024. 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 in the third quarter of 2024 was used to quantify the popularity of each stock in the hedge fund universe.
A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Position size: $1.87 billion
Activity: -1%
Apple Inc (AAPL)
AAPL stock was the third largest position in AQR’s portfolio at the end of the first quarter when we last talked about AQR’s AAPL investment. AAPL shares were trading at $171 at the time. Here is what we wrote:
“Though Apple Inc. (NASDAQ: AAPL) has been viewed as an underdog in the AI race, but recent advancements, including the introduction of the M4-powered iPad Pro with a powerful Neural Engine, indicate a resurgence. Following AI-focused announcements at WWDC, Apple’s market cap soared by over $215 billion, reaching a record high. Analyst Ming-Chi Kuo emphasizes Apple’s competitive edge in on-device AI capabilities whereas Gene Munster suggests Apple is a better long-term investment than Nvidia due to its AI potential. Apple’s current valuation at 26 times its 2025 EPS estimate aligns reasonably with its projected sales growth, indicating its alignment with its growth prospects.”
AAPL stock returned more than 40% since the end of first quarter. AQR took some money off the table, but its AAPL position still increased from $1.44 billion to $1.87 billion. Overall, AQR owns 0.05% of AAPL’s outstanding shares.
Overall AAPL ranks 2nd on our list of the stocks that are dominating a billionaire quant’s investment strategy. While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.
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