By Eric Winter
When a hedge fund reveals its latest 13F filing, investors can glean a large array of information from the document, including top holdings, highest dividend-yielding picks, and new stock positions made during that quarter. These discoveries can lead to some impressive strategies that a retail investor can capitalize on. We have found that a grouping of the most popular small-cap stocks amongst hedge funds outperformed the market by 18 percentage points per year (read more about it here). We have reviewed legendary investor Jim Simoms' latest 13F and have outlined his largest new purchases here.
General Electric Company (GE) was Renaissance Technologies' largest new purchase with an investment of roughly $185mm. The technology and financial services company saw a slight decline in popularity amongst hedge funds towards the end of last year, with 60 hedge funds holding the stock in Q4 2012 versus 63 in the third quarter. GE consistently met Wall Street's earnings expectations each quarter last year and is expected to report an EPS of $0.35 next month. GE is currently suing Whirlpool and two European suppliers, claiming that its rivals conspired to fix prices on refrigerator parts, leading to overpayment on GE's end. Billionaire Ken Fisher dropped his position slightly according to his latest 13F but still holds over 30mm shares (check out his fund's top stocks here).
Simons made 437 new purchases in the last quarter of 2012, and he allocated 0.51% of his fund's billions to PepsiCo, Inc. (PEP). The stock has performed well recently and is currently making new highs. Last week, PEP took advantage of the current low interest rate environment and sold $2.5bn in corporate bonds. The company's latest earnings call in February showed that the beverage maker is awaiting FDA approval for a new sweetener to be marketed in healthier varieties of its sodas; the healthier versions could increase market share for PepsiCo in that category and appease the anti-soda activists going forward. Fellow billionaire Ken Griffin of Citadel Investment Group added to his cash position in the same quarter.
National Oilwell Varco, Inc. (NOV) was his third largest new buy, taking up $154mm of the fund's $34bn in assets. The stock struggled since this time last year, racking up a net loss in share value of over 16%. NOV was recently downgraded by both Ameriprise Financial and Bernstein and saw a decrease in ownership amongst the 400+ hedge funds we track going into the end of 2012. However, the stock is still heavily undervalued according to sell-side analysts, leading to a potential 26% of upside if it reaches the one year mean price target set out by Wall Street. David Harding of Winton Capital Management may not be a believer, as he dropped his holdings by 87% recently.
Facebook Inc. (FB) was another large purchase, totaling almost $150mm for the fund. The pervasive social network stock saw a significant bump in popularity amongst hedge funds from Q3 2012 to Q4 2012, with 67 funds holding the stock versus 48, respectively. The tech company continues to improve its news feed feature, incorporating photo and music-specific feeds in the near future while seeing ad revenue climb rapidly due to its Sponsored Stories category. The stock still sees opposition from analyst across the Street; Jefferies and Stifel Nicolaus join a number of other firms that have downgraded the stock since the start of the year. Billionaire Leon Cooperman of Omega Advisors adopted a new position in Q4 2012 as well.
Gilead Sciences, Inc. (GILD) was the last new addition we'll cover. Renaissance saw fit to dump $113mm into the stock. The bio-pharmaceutical company gave an amazing performance stretching back the past twelve months, almost doubling in value. The company has recently started Phase 3 studies of its HIV drug Tenofovir Alafenmide after reporting successful results from its Phase 2 study. GILD recently earned an upgrade to Outperform from Credit Suisse last month. Daniel S. Och of OZ Management recently added to his call option position in GILD according to his latest 13F.