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Jim Simons' Medallion Fund is the best hedge fund that we have come across. The fund's returns are so spectacular that Jim Simons became one of the richest people on the planet. Medallion Fund employs high frequency trading and exploits inefficiencies in the stock market. One strategy they use takes advantage of the inefficiencies in the execution of large transactions.

One of their algorithms determines whether a very large order is executed and front runs it. As a result Medallion experiences high transaction costs and high expenses. That's why they charge a 5% fixed fee. On top of that they charge performance fee. That fee had been 20%, but after 2000 it increased initially to 36% and then to 44%.

According to 13F filings, Jim Simons’ Renaissance Technologies had at least 2859 securities with a total value of $24.8 billion as of March 31st 2011. Jim Simons’ top stock picks managed to beat the market by a large margin since the end of first quarter. Here are Simons’ top 20 stock picks:

  1. EXXON MOBIL CORP (XOM): XOM recently traded at $74.82 and has a 2.51% dividend yield. XOM gained 23.71% during the past 12 months. The stock has a market cap of $368.6 billion and P/E ratio of 9.8. Simons had $142 million invested in XOM shares. XOM is listed as one of the top 11 energy stocks that hedge funds are buying like crazy. Sixteen hedge funds had XOM among their top 10 holdings. Hedge funds collectively own 1% of XOM’s outstanding shares. Phill Gross’ Adage and Ken Fisher were among the fund managers who are bullish about XOM.
  2. APPLE INC (AAPL): AAPL recently traded at $373.62 and gained 43.65% during the past 12 months. The stock has a market cap of $346.4 billion and P/E ratio of 14.8. Simons had $197 million invested in AAPL shares. Hedge funds had $7.3 Billion in AAPL. Rob Citrone’s Discovery Capital had $633 Million in AAPL at the end of March.
  3. GOOGLE INC (GOOG): GOOG recently traded at $579.04 and gained 15.76% during the past 12 months. The stock has a market cap of $187 billion and P/E ratio of 20.9. Simons had $115 million invested in GOOG shares. Hedge funds had $3.9 Billion in Google. Ken Griffin’s Citadel wasn’t among the 75 hedge funds that are bullish about GOOG. However, Citadel had $665 Million in GOOG shares, $548 Million in GOOG call options, and $804 Million in GOOG put options. These numbers don’t tell us how bullish/bearish Griffin is about Google.
  4. GENERAL ELECTRIC CO (GE): GE recently traded at $16.51 and has a 3.63% dividend yield. GE gained 3.45% during the past 12 months. The stock has a market cap of $175.1 billion and P/E ratio of 12.8. Simons had $151 million invested in GE shares. Warren Buffett also had $156 million invested in GE shares. Ray Dalio’s second largest stock holding is GE. Bridgewater boosted its holdings by 20% during the first quarter. D.E. Shaw and Berkowitz’s Fairholme are the largest holders of GE. Sandy Nairn’s Edinburgh Partners, James Dinan’s York Capital and Cohen’s SAC Capital had at least $100 million in GE at the end of March.
  5. JOHNSON & JOHNSON (JNJ): JNJ recently traded at $62.71 and has a 3.64% dividend yield. JNJ gained 8.38% during the past 12 months. The stock has a market cap of $171.9 billion and P/E ratio of 15. Simons had $397 million invested in JNJ shares. JNJ is one of the top 10 most popular stocks among hedge funds. Hedge funds had $4.7 billion in JNJ at the end of March.
  6. COCA COLA CO (KO): KO recently traded at $66.77 and has a 2.82% dividend yield. KO gained 21.11% during the past 12 months. The stock has a market cap of $152.9 billion and P/E ratio of 12.5. Simons had $230 million invested in KO shares. Warren Buffett also had $13.3 billion invested in KO shares and Buffett's stake in the company is 8.7%. Buffett made more than $7 billion with his Coca-Cola investment.
  7. INTEL CORP (INTC): INTC recently traded at $20.79 and has a 4.04% dividend yield. INTC gained 4.16% during the past 12 months. The stock has a market cap of $110.2 billion and P/E ratio of 9.5. Simons had $209 million invested in INTC shares.
  8. MCDONALD'S CORP (MCD): MCD recently traded at $85.08 and has a 2.87% dividend yield. MCD gained 22.31% during the past 12 months. The stock has a market cap of $88.3 billion and P/E ratio of 17.2. Simons had $139 million invested in MCD shares.
  9. NOVO-NORDISK A S (NVO): NVO recently traded at $107.34 and has a 1.76% dividend yield. NVO gained 21.54% during the past 12 months. The stock has a market cap of $73 billion and P/E ratio of 21.9. Simons had $175 million invested in NVO shares.
  10. TAIWAN SEMICONDUCTOR MFG LTD (TSM): TSM recently traded at $11.56 and has a 4.48% dividend yield. TSM gained 19.05% during the past 12 months. The stock has a market cap of $59.9 billion and P/E ratio of 10.5. Simons had $104 million invested in TSM shares.
  11. BRISTOL MYERS SQUIBB CO (BMY): BMY recently traded at $27.43 and has a 4.81% dividend yield. BMY gained 9.15% during the past 12 months. The stock has a market cap of $46.8 billion and P/E ratio of 14.3. Simons had $123 million invested in BMY shares.
  12. ELI LILLY & CO (LLY): LLY recently traded at $36.24 and has a 5.41% dividend yield. LLY gained 3.69% during the past 12 months. The stock has a market cap of $42 billion and P/E ratio of 8.5. Simons had $228 million invested in LLY shares.
  13. COLGATE PALMOLIVE CO (CL): CL recently traded at $84.15 and has a 2.76% dividend yield. CL gained 13.04% during the past 12 months. The stock has a market cap of $41.1 billion and P/E ratio of 17.2. Simons had $154 million invested in CL shares.
  14. ISHARES TR (EEM): EEM recently traded at $42.58 and has a 1.93% dividend yield. EEM gained 3.05% during the past 12 months. The stock has a market cap of $38.4. Simons had $155 million invested in EEM shares.
  15. TARGET CORP (TGT): TGT recently traded at $48.65 and has a 2.47% dividend yield. TGT lost 5.22% during the past 12 months. The stock has a market cap of $33.5 billion and P/E ratio of 11.9. Simons had $191 million invested in TGT shares.
  16. PRICELINE COM INC (PCLN): PCLN recently traded at $527.81 and gained 78.77% during the past 12 months. The stock has a market cap of $26.2 billion and P/E ratio of 46.4. Simons had $248 million invested in PCLN shares.
  17. LORILLARD INC (LO): Lorillard is the third largest tobacco company in the U.S., has 2700 employees and reported operating profit of $1.7 billion in 2010. LO recently traded at $105.25 and has a 4.94% dividend yield. LO gained 46.73% during the past 12 months. The stock has a market cap of $15.1 billion and P/E ratio of 14.4. Simons had $257 million invested in LO shares. Paulson had $55 million invested in LO shares. Jeffrey Gates’ Gates Capital also had $24 million invested in LO shares.
  18. ALTERA CORP (ALTR): ALTR recently traded at $36.42 and has a 0.88% dividend yield. ALTR gained 32.39% during the past 12 months. The stock has a market cap of $11.8 billion and P/E ratio of 13.3. Simons had $164 million invested in ALTR shares.
  19. STAPLES INC (SPLS): SPLS recently traded at $14.34 and has a 2.79% dividend yield. SPLS lost 27.47% during the past 12 months. The stock has a market cap of $10.2 billion and P/E ratio of 11.6. Simons had $112 million invested in SPLS shares.
  20. CHIPOTLE MEXICAN GRILL INC (CMG): CMG recently traded at $311.52 and gained 105.49% during the past 12 months. The stock has a market cap of $9.8 billion and P/E ratio of 51.5. Simons had $123 million invested in CMG shares.

On 27 June, Cramer said the following about CMG: “The relationship is simple ... When gas prices go down, restaurant stocks go up. But you don't want to own just any restaurants. You want the best of the bunch and, in this environment, that's Darden for consistent, conservative growth and Chipotle to shoot the lights out for all you risk takers.”

Mark Broach’s Manatuck Hill Partners was the other hedge fund which had the large position in CMG. Manatuck Hill Partners was the second best performing hedge fund during second quarter (see the top 25 hedge funds in Q2 2011).

Market data is sourced from Finviz.

Source: Jim Simons' 20 Favorite Holdings