Jim Simons' Medallion Fund is the best hedge fund that we have come across. The firm charges a fixed 5% management fee and takes 44% of the returns generated. After these expenses are deducted Medallion provided an average annual return of 35% to its investors. A couple of months ago, our calculations showed that Medallion's annual alpha is 34%. The success of Medallion fund is why Jim Simons is one the wealthiest people on the planet.
Medallion fund usually trades in small quantities. The median position size is less than $2.5 million. However, Jim Simons has some positions in his portfolio that are as large as $397 million. These positions were probably acquired for Simons' Renaissance Institutional Equities Fund (RIEF). RIEF isn't nearly as successful as Medallion but managed to beat the index funds since inception.
We compiled Jim Simons' high dividend stock picks that were at least $15 million at the end of March. We required a minimum dividend yield of 4% and yields were obtained from Fidelity. Here are Simons' favorite high dividend stock picks:
CompanyName | Ticker | Value (x1000) | Dividend Yield |
LORILLARD INC | 256765 | 4.7 | |
LILLY ELI & CO | 227895 | 5.3 | |
BRISTOL MYERS SQUIBB CO | 123256 | 4.8 | |
PHILIPPINE LONG DISTANCE TELE CO | 97375 | 6.8 | |
CENTURYLINK INC | 89267 | 7.3 | |
CELLCOM ISRAEL LTD | 71486 | 12.8 | |
LINN ENERGY LLC | 63853 | 7.1 | |
MERCK & CO INC NEW | 53889 | 4.3 | |
BANK MONTREAL QUE | 52211 | 4.6 | |
SOUTHERN COPPER CORP | 47571 | 7.2 | |
REYNOLDS AMERICAN INC | 45393 | 5.7 | |
WINDSTREAM CORP | 45355 | 7.7 | |
CENTERPOINT ENERGY INC | 43366 | 4.2 | |
P G & E CORP | 40138 | 4.3 | |
H C P INC | 37170 | 5.2 | |
A T & T INC | 34097 | 5.7 | |
CHUNGHWA TELECOM CO LTD | 33317 | 4.7 | |
PARTNER COMMUNICATIONS CO LTD | 30390 | 9.9 | |
INTEGRYS ENERGY GROUP INC | 24154 | 5.5 | |
B T GROUP PLC | 21916 | 5.1 | |
NOKIA CORP | 21533 | 9.6 | |
ASTRAZENECA PLC | 21211 | 7.6 | |
C M S ENERGY CORP | 19956 | 4.3 | |
FRONTIER COMMUNICATIONS CORP | 19379 | 9.5 | |
CONSOLIDATED EDISON INC | 17559 | 4.6 | |
NEW YORK COMMUNITY BANCORP INC | 17162 | 6.3 | |
VIVO PARTICIPACOES S A | 16678 | 12.9 | |
ENBRIDGE ENERGY PARTNERS LP | 16517 | 7.0 | |
ENERGY TRANSFER PARTNERS L P | 15880 | 7.6 | |
WEINGARTEN REALTY INVESTORS | 15289 | 4.6 | |
FIRST NIAGARA FINL GROUP INC NEW | 15195 | 4.7 |
Simons' favorite high dividend stock was LO, which returned more than 17% since the end of March. This has been an amazing pick for Simons this year. Simons had $360 Million in LO at the end of December, and the stock returned 18% during the first quarter as it was revealed that the regulation on Menthol cigarettes weren't as restrictive as feared. Simons' trimmed his position by 38% during the first quarter, yet it was still his third largest position. First Eagle Investment Management and Paulson&Co (See John Paulson's top stock picks here) were also betting on LO during the first quarter.
One of Simons' highest yielding and largest position was Cellcom Israel. The stock lost nearly 12% since the end of March and this decline boosted its yield to 12.8%. Most of Simons' favorite dividend stocks are from telecom and pharmaceuticals. Eli Lilly and Bristol Myers are among Simons' top three dividend stock picks.
Jim Simons' Renaissance is one of our favorite hedge funds and we believe his favorite dividend picks will beat the 10-year treasuries over the long term (See Jim Simons' largest other stock picks here). We also think that these stocks have the potential to deliver large capital gains as well. Simons probably didn't buy them just for their high yields.
Disclosure: I am long CTL, T, FTR.
