We recently published a list of Arrowstreet Capital Stock Portfolio: Top 10 Stocks to Buy. In this article, we are going to take a look at where Shopify Inc. (NYSE:SHOP) stands against other top stocks to buy from Arrowstreet Capital’s portfolio.
Arrowstreet Capital is a Boston-based independent investment management firm known for its quantitative investment strategies and discreet market presence despite overseeing substantial assets. Founded in 1999 by Bruce Clarke, former CEO of PanAgora Asset Management, along with John Y. Campbell and Peter Rathjens, the firm was created to manage institutional investments, focusing on international and emerging market equities. Its client base includes major institutions such as the Oregon Public Employees Retirement System, CalPERS, and Macquarie Group.
In terms of investment philosophy, Arrowstreet Capital operates as a unified team to manage client portfolios through a global, quantitative approach, leveraging data-driven insights to identify market inefficiencies and generate sustainable, risk-adjusted returns. Its strategy is based on research and technology, using quantitative models to uncover investment opportunities that may not be immediately apparent to the broader market. With a focus on global equities across both developed and emerging markets, the fund constructs diversified portfolios aimed at delivering long-term value.
Moreover, Arrowstreet Capital prioritizes continuous improvement in response to shifting market conditions, integrating new data sources and employing advanced data science tools to refine its investment insights and enhance portfolio performance. While Arrowstreet does not assume that ESG-focused stocks will consistently outperform, it acknowledges the impact of environmental, social, and corporate governance factors on profitability and risk, incorporating them into its models. The firm’s collaborative team structure ensures active portfolio management, with a strong emphasis on long-term investment strategies and talent development.
Peter Rathjens is the Chief Investment Officer at Arrowstreet Capital in Boston, Massachusetts. He holds a BA from Oberlin College and an MA from Princeton University. Bruce Clarke, Co-Founder and Chairman of Arrowstreet Capital, leads an institutional asset management firm overseeing a portfolio exceeding $140 billion. Previously, he served as CEO of PanAgora Asset Management and gained international experience working in Canada, the UK, Italy, and the US. Clarke earned an MBA from London Business School and a Bachelor’s degree from the University of British Columbia. John Young Campbell, a Partner and Co-Head of Research at Arrowstreet, has an extensive background in finance, having served as President of the American Finance Association, Director of Research at PanAgora Asset Management, a professor at Princeton University, and President of the International Atlantic Economic Society. He holds a doctorate from Yale University and an undergraduate degree from the University of Oxford.
Arrowstreet Capital’s latest 13F filing for Q4 2024 reported $124.94 billion in managed 13F securities, with a top 10 holdings concentration of 28.9%. This reflects the firm’s strategic focus on high-value investments while maintaining a diversified portfolio.
Our Methodology
The stocks discussed below were picked from Arrowstreet Capital’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from over 1,000 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders as of Q4: 64
Arrowstreet Capital’s Equity Stake: $1.75 Billion
Shopify Inc. (NYSE:SHOP), a multinational e-commerce company, reported impressive revenue growth for the fourth quarter, surpassing expectations, though it fell short on earnings. The company posted adjusted earnings per share (EPS) of $0.39, missing the projected $0.43. However, revenue came in stronger than anticipated at $2.81 billion, exceeding the forecasted $2.73 billion. This represented a significant 31% increase from the $2.14 billion recorded in the same quarter of the previous year, demonstrating Shopify’s continued expansion and the increasing activity of its merchants. The company’s solid revenue performance highlights its ability to attract and retain businesses on its platform, even in a competitive e-commerce landscape.
Despite the earnings miss, Shopify Inc. (NYSE:SHOP) remains confident about its long-term growth prospects. The company expects the momentum seen in Q4 to extend into the first quarter, although it acknowledged that Q1 is historically its weakest in terms of gross merchandise volume. This positive outlook reflects Shopify’s strengthening ecosystem and the increasing adoption of its commerce solutions. The earnings report also comes at a time of broader shifts in the e-commerce sector, following former President Donald Trump’s recent tariffs on major trading partners and his decision to end the de minimis trade loophole, a policy often leveraged by Chinese online retailers. During an investor call, Shopify President Harley Finkelstein underscored the importance of the de minimis exemption for small businesses, emphasizing how it helps lower shipping costs and enables merchants to remain competitive. He also called for further reforms to support global commerce while ensuring fair trade practices.
As of Q4 2024, Arrowstreet Capital significantly boosted its holdings in Shopify Inc. (NYSE:SHOP), increasing its stake by 80% to over 16 million shares, up from 9 million shares in Q3. This move elevated the fund’s total investment in the company to nearly $1.8 billion. The strong hedge fund interest underscores growing confidence in Shopify’s long-term potential, making it a top stock to buy.
Overall, SHOP ranks 6th on our list of top stocks to buy from Arrowstreet Capital’s portfolio. While we acknowledge the potential for SHOP 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 SHOP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.