AQR Arbitrage LLC Q3 2022 vs. Q4 2022 13F Holdings Comparison: A Deep Dive into the Changes in Fund Holdings

Over the past year, the world of finance has been in a constant state of flux, with markets experiencing unprecedented levels of volatility. Among the many things affected by this turbulence are the holdings of various funds. One such fund that has recently undergone some significant changes in its holdings is the AQR Arbitrage LLC.

In this article, we will take a closer look at the changes in fund holdings from Q3 2022 to Q4 2022 made by AQR Arbitrage LLC as reported in the 13F filings. We'll analyze the numbers and explore some of the reasons behind the changes.

Before we delve into the changes in holdings, let's first understand some basic concepts. A 13F is a quarterly report filed by institutional investment managers that discloses their holdings of equity securities. The report, which is required by the SEC, includes the name of the issuer, the number of shares held, and the total value of those shares at the end of the quarter.

In Q3 2022, AQR Arbitrage LLC reported holdings in 32 issuers. The total value of its holdings was $665,475 thousand, with the top three holdings being Etsy Inc, Sea Ltd, and Lyft Inc. However, in Q4 2022, the number of issuers in which the fund reported holdings decreased to 31, with the total value of holdings decreasing to $647,134 thousand.

One notable change in holdings is the increase in shares of VMWare Inc. The fund increased its holdings by 15,971 shares, which translates to 3.4% of its Q3 holdings. This increase in holdings is significant, considering that the value of these shares increased by 18.3%.

Another notable change is the decrease in holdings of Lyft Inc. The number of shares held by the fund decreased by 6,250,000, which is almost 24% of its Q3 holdings. This decrease in holdings aligns with the decrease in value of Lyft shares, which dipped by 20.7%.

Furthermore, the fund significantly increased its holdings in KnowBe4 Inc. In Q3 2022, the fund held only 93,750 shares. However, in Q4 2022, the number of shares increased by a staggering 837,301, which is a 894% increase. The value of the shares also increased significantly by 955.5%.

These were just a few examples of the changes in holdings made by AQR Arbitrage LLC. Of course, there are several other holdings that experienced changes, which we will not delve into in this article.

To make sense of these changes, we must first understand the nature and investment philosophy of AQR Arbitrage LLC. The fund aims to generate returns by exploiting pricing differences between securities with similar characteristics. In other words, the fund engages in strategies that take advantage of market inefficiencies.

Based on its investment philosophy, it is evident why the fund may have increased its holdings in VMWare Inc., a company with a strong competitive position and earnings growth potential, and decreased its holdings in Lyft Inc., a company that has been losing market share and underperforming in terms of earnings.

In conclusion, the changes in holdings reported by AQR Arbitrage LLC from Q3 2022 to Q4 2022 is a reflection of the fund's investment strategy and philosophy. By analyzing the changes in holdings, we gain important insights into the investment decisions made by the fund and the reasons behind them.