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AQR Capital’s Performance, AUM and Top Stock Picks

In this article, we discuss AQR Capital’s performance, AUM, and its top stock picks. If you want to see more stocks in this selection, check out AQR Capital's Top 5 Stock Picks

Cliff Asness’ AQR Capital Management  is among the biggest hedge funds in the world (see AQR's performance and AUM in here). AQR Capital's trend-following strategies are racking up significant gains this year as quants win inflation-driven price patterns in almost all asset categories. AQR Capital’s Managed Futures Full Volatility Strategy, representing about $1 billion in assets, returned more than 9% to investors in the 30-day period ending October 6, which takes the total returns this year to 70%. Simultaneously, AQR’s $450 million Alternative Trend Strategy has posted a 47% gain in 2022. AQR’s primary strategy is to utilize derivatives to follow price trends in most asset classes, including stocks, bonds, commodities, and credit-default swaps. 

Bloomberg data suggests that a broad index tracking rule-based trend investing from Societe Generale SA is up 31%, marking one of the best gains for this year. Comparatively, AQR’s primary mutual fund has returned about 38% to investors this year. Yao Hua Ooi, principal at AQR, said in an interview: 

“If macroeconomic volatility stays high and asset classes continue to show big moves in the same direction, we expect to see continued high returns for these strategies.”

As of the end of the third quarter of 2022, AQR Capital had discretionary assets under management of $145.45 billion, and the hedge fund managed a Q3 portfolio worth $41 billion. Some of the most notable stocks in the AQR portfolio include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG). 

Our Methodology 

We selected the top 10 stocks from the AQR portfolio as of the end of the third quarter of 2022 for this analysis. The stocks are arranged according to the hedge fund’s stake value in each holding. Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022 was used to assess the hedge fund sentiment around the securities. 

AQR Capital's Performance, AUM and Top Stock Picks
AQR Capital's Performance, AUM and Top Stock Picks

Cliff Asness of AQR Capital Management

AQR Capital's Performance, AUM and Top Stock Picks

10. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 177

AQR Capital's Stake Value: $356,988,000

Meta Platforms, Inc. (NASDAQ:META) has been part of AQR Capital’s portfolio since the third quarter of 2013, apart from a few breaks over the years. Securities filings for the third quarter of 2022 reveal that AQR Capital owns 2.6 million shares of Meta Platforms, Inc. (NASDAQ:META) worth about $357 million, representing 0.87% of the total portfolio. 

On November 15, Morgan Stanley analyst Brian Nowak reiterated an Equal Weight rating on Meta Platforms, Inc. (NASDAQ:META) but trimmed the price target on the shares to $100 from $105. Indicators of a soft ad market continued to increase through Q3 earnings season as 14 of 19 firms he covers in the sector either missed Q3 ad revenue estimates or slashed forward growth expectations, the analyst told investors. He reduced his 2023 U.S. online advertising and e-commerce estimates and now forecasts about 6% and 5% growth in online advertising and e-commerce, respectively.

According to Insider Monkey’s data, Meta Platforms, Inc. (NASDAQ:META) was part of 177 hedge fund portfolios at the end of Q3 2022, compared to 185 funds in the prior quarter. Ken Fisher’s Fisher Asset Management held a prominent stake in the company, comprising 11.8 million shares worth $1.60 billion. 

Like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META) is one of the top stock picks of AQR Capital. 

Baron Funds made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2022 investor letter:

“Shares of Meta Platforms, Inc. (NASDAQ:META), the world’s largest social network, were down 16% during the quarter primarily due to broader digital advertising weakness and continued difficulties with advertising effectiveness as a result of Apple’s enhanced privacy features implemented in late 2021. We believe Meta will successfully resolve its short-term advertising technology issues by increasing AI adoption and by driving greater in-App user engagement with businesses, enabling it to grow its understanding of people’s interests based on first-party data. Longer term, we believe Meta will utilize its leadership in mobile advertising, massive user base, and technological scale to provide global advertisers targeted marketing capabilities at scale, with additional monetization opportunities ahead in newer areas such as Reels (Meta’s competing solution to TikTok) and e-commerce.”

9. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 67

AQR Capital's Stake Value: $365,686,000

CVS Health Corporation (NYSE:CVS) is an American provider of health services in the United States. The company operates through Health Care Benefits, Pharmacy Services, and Retail/LTC segments. Cliff Asness’ AQR Capital owns 3.8 million shares of CVS Health Corporation (NYSE:CVS) worth $365.6 million as of Q3 2022, representing 0.89% of the total 13F securities. 

On November 2, CVS Health Corporation (NYSE:CVS) reported a Q3 non-GAAP EPS of $2.09 and a revenue of $81.2 billion, topping Wall Street estimates by $0.10 and $4.42 billion, respectively. For full-year 2022, CVS Health Corporation (NYSE:CVS) raised the adjusted EPS guidance range to $8.55-$8.65 from $8.40-$8.60, compared to an $8.55 consensus. The company lifted cash flow from operations guidance range to $13.5 billion-$14.5 billion from $12.5 billion-$13.5 billion. 

Raymond James analyst John Ransom on November 14 maintained an Outperform rating on CVS Health Corporation (NYSE:CVS) but trimmed the price target on the shares to $115 from $120 following Q3 results that were better-than-anticipated, supported by robust results in HCB, while the PBM and retail were comparatively in line. For 2024, the analyst sees risk to management's EPS estimate of low double-digit growth given the macro headwinds, but believes that it has already been priced into the shares. 

According to Insider Monkey’s data, 67 hedge funds were bullish on CVS Health Corporation (NYSE:CVS) at the end of the third quarter of 2022, compared to 65 funds in the preceding quarter. Ray Dalio’s Bridgewater Associates is a significant position holder in the company, with more than 3 million shares worth $293.7 million. 

Here is what Vltava Fund has to say about CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter:

“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.

We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.

This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”

8. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 75

AQR Capital's Stake Value: $379,998,000

Exxon Mobil Corporation (NYSE:XOM), the American oil and gas supermajor, has consistently featured on the AQR portfolio since the last quarter of 2010, apart from a few breaks over the years. In Q3 2022, the hedge fund owned 4.35 million shares of Exxon Mobil Corporation (NYSE:XOM) worth nearly $380 million, representing 0.92% of the total 13F securities. 

Exxon Mobil Corporation (NYSE:XOM) announced on November 14 that in collaboration with Pertamina, an Indonesian national oil company, it has signed a $2.5 billion agreement to further assess plans for an offshore carbon capture and storage project in the country. This project will have the potential to store about 3 billion metric tons of carbon dioxide. 

On November 11, Piper Sandler analyst Ryan Todd raised the price target on Exxon Mobil Corporation (NYSE:XOM) to $131 from $113 and kept an Overweight rating on the shares. The Q3 results were incrementally bullish for the integrated oil 2023 macro outlook, the analyst told investors in a research note.

According to Insider Monkey’s data, 75 hedge funds were long Exxon Mobil Corporation (NYSE:XOM) at the end of Q3 2022, compared to 72 funds in the prior quarter. Rajiv Jain’s GQG Partners held the largest stake in the company, comprising 33.8 million shares worth approximately $3 billion. 

In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation (NYSE:XOM) was one of them. Here is what the fund said:

“Integrated oil and gas giant Exxon Mobil Corporation (NYSE:XOM) performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industry wide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

7. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 88

AQR Capital's Stake Value: $381,898,000

AQR Capital has owned a position in Tesla, Inc. (NASDAQ:TSLA) since the third quarter of 2012, except for minor breaks over the years. AQR strengthened its hold on Tesla, Inc. (NASDAQ:TSLA) by a whopping 327% in Q3 2022. The hedge fund owned 1.4 million shares of the company worth about $382 million, representing 0.93% of the total 13F portfolio. 

On November 11, Elon Musk's Tesla, Inc. (NASDAQ:TSLA) announced that it added 43 Supercharger stations, including 174 Superchargers, in the Chinese mainland during October. These new facilities are based in 31 cities, including Shanghai, Chongqing, Nanjing, and Chengdu, among others.

Wedbush analyst Daniel Ives on November 10 removed Tesla, Inc. (NASDAQ:TSLA) from the firm's "Best Ideas" list, citing his short-term view that things are "increasingly becoming more challenged," though his longer-term bullish view of Tesla, Inc. (NASDAQ:TSLA) remains largely unchanged. He sees "a very nervous few months ahead for Tesla investors" as they "remain the ones that have been punched again and again by the Musk Twitter antics," Ives said. However, the stock is "deep in the investor penalty box until deliveries hit in early January," and the analyst maintained an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) shares.

Among the hedge funds tracked by Insider Monkey, 88 funds reported owning stakes worth $7.4 billion in Tesla, Inc. (NASDAQ:TSLA) at the end of the third quarter of 2022, compared to 73 funds in the prior quarter worth $7.1 billion. Cathie Wood’s ARK Investment Management held a significant stake in the company, consisting of more than 4 million shares worth $1.08 billion. 

Alger Capital made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q3 2022 investor letter:

“Tesla, Inc. (NASDAQ:TSLA) is an electric vehicle manufacturer with a significant technological lead in its large and rapidly growing addressable market. Shares outperformed during the quarter despite covid 19 shutdowns at the company’s shanghai production plant early in the period. During this quarter, the company also ramped up production at its newer Germany and Texas plants. While investors were aware of these challenging variables, the company’s quarterly results exceeded expectations thanks to lower-than-expected operating expenses. Investors are aware that ramping up electric vehicle production is challenging and recognize it’s difficult to estimate production rates.”

6. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 269

AQR Capital's Stake Value: $422,010,000

Amazon.com, Inc. (NASDAQ:AMZN) is a long-term holding of AQR Capital. The hedge fund has owned a stake in the company since the last quarter of 2010, except for a few breaks over the years. In the third quarter of 2022, AQR held 3.7 million shares of Amazon.com, Inc. (NASDAQ:AMZN) worth $422 million, representing 1.02% of the total portfolio. 

On November 16, Amazon.com, Inc. (NASDAQ:AMZN) announced that its cloud computing division, Amazon Web Services, would establish an infrastructure region in Spain and invest up to $2.6 billion in the country over the span of a decade. This will generate more than 1,300 full-time jobs in Spain and add approximately $1.8 billion to the country’s gross domestic product.

MoffettNathanson analyst Michael Morton on November 15 assumed coverage of Amazon.com, Inc. (NASDAQ:AMZN) with an Outperform rating and a $118 price target. The analyst does not believe in the bear case scenario of peak e-commerce penetration and thinks e-commerce penetration growth will continue at the historical pace. He prefers market share gainers and finds it "challenging to have an appetite for market share losers" as he noted that the algorithm of the internet "creates a self-fulfilling prophecy for continued share loss once it starts."

According to Insider Monkey’s Q3 data, 269 hedge funds were long Amazon.com, Inc. (NASDAQ:AMZN), up from 252 funds in the prior quarter. The collective stakes in Q3 increased to $34.6 billion from $30 billion in Q2. 

In addition to Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN) is backed by AQR Capital and other elite hedge funds. 

Baron Funds made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-over-year. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”

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Disclosure: None. AQR Capital's Performance, AUM and Top Stock Picks is originally published on Insider Monkey.