Jim Simons, founder of Renaissance Technologies, is one of the most successful hedge fund managers in the world. He is the CEO of the New York-based Renaissance Technologies. Simons is known as a mathematician, and he employs mathematicians, physicists, and statisticians with limited financial background. According to Forbes, with net wealth of $10.6 billion, he ranks among the top 30 billionaires in U.S.
According to some latest filings of Renaissance Technologies submitted to Edgar Online, Simons has a well-diversified portfolio of equities. Renaissance Technologies LLC has $22.65 billion invested in U.S. equities. Service stocks cover approximately 22.90% of the portfolio, followed by technology at 19.29% and healthcare stocks at 13.30%. Non-cyclical consumer stocks constitute 11.32% of the portfolio. Simons increased positions in 1682 stocks and reduced positions in 1639 stocks. I have examined his five big buys and two big sells from a fundamental perspective, adding my O-Metrix Grading System where possible:
Company Name | Ticker | Shares Held | % Change | % of Portfolio | O-Metrix Score* |
Apple | 1.33 million | 135% | 2.19% | 7.87 | |
Procter & Gamble | 3.98 million | NEW | 1.10% | 4.90 | |
0.55 million | 182% | 1.28% | 6.12 | ||
JP Morgan | 4.88 million | NEW | 0.75% | 9.16 | |
Phillip Morris | 3.363 million | 160% | 1.09% | 5.34 | |
Johnson & J. | 1.215 million | -82% | 0.34 | 3.5 | |
Novartis | 0 | Sold Out | 0 | 3.79 |
Data obtained from Finviz/Morningstar and is current as of September 2. Click here for more information on O-Metrix Grading System.
Apple lost 2.5% in the last week, but returned 10.65% in the last quarter. Apple is the most popular stock among hedge funds. Renaissance Technologies owns 1.33 million stocks and invested 2.19% of its portfolio on Apple. Apple was not affected much from the recent sell-off. It has been an outperformer, returning 44.55% in one year. Analysts have a mean target price of $490, implying almost 30% upside potential. As of the September 2 close, the stock is trading with a trailing P/E ratio of 14.81 and a forward P/E ratio of 11.67. The stock is sitting on $30 of cash per share. Based on 20.85% EPS growth estimate, Apple has an O-Metrix score of 7.87 and a PEG ratio of 0.71.
Procter & Gamble was deeply affected from the recent sell-off, but the stock bounced back to pre-August level. While it lost 3.72% in the last quarter, it returned 5% in the last week. Renaissance Technologies initiated a new purchase of 3.98 million stocks and invested 1.1% of its portfolio on P&G. Analysts have a mean target price of $70.10, implying almost 13% upside potential. As of the September 2 close, the stock is trading with a trailing P/E ratio of 15.92 and a forward P/E ratio of 13.57. Dividend yield is 3.36%. PEG ratio of 1.74 is well above the norm of 1. Based on 9.14% EPS growth estimate, P&G has an O-Metrix score of 4.90.
Google, the search engine titan, lost 9.12% in the last month and 0.73% in the last quarter. Renaissance Technologies increased its holdings by 182% and invested 1.28% of its portfolio on Google. The stock returned 11.60% in a year. Analysts have a mean target price of $726, implying about 38% upside potential. As of the September 2 close, the stock is trading with a trailing P/E ratio of 18.93 and a low forward P/E ratio of 12.54. Current ratio of 5.96 and debt/equity ratio of 0.08 are among the best in the industry. PEG ratio of 0.99 is just below the norm of 1. Based on 19.20% EPS growth estimate, Google has an O-Metrix score of 6.12. I think Google is a much better choice than Baidu (BIDU).
JPMorgan was among the biggest losers of the recent sell-off. The stock lost 8.68% in the last month and 14.03% in the last quarter. Renaissance Technologies initiated a new purchase of 4.88 million stocks and invested 0.75% of its portfolio on JP Morgan. The stock returned -17.33% since January. Analysts have a mean target price of $54.88, implying about 57% upside potential. As of the September 2 close, the stock is trading with a low trailing P/E ratio of 7.40 and a lower forward P/E ratio of 6.19. Dividend yield is 2.89%. The stock has a book value of $46.76. PEG ratio of 0.79 is well-below the norm of 1. Based on 9.39% EPS growth estimate, JP Morgan has an O-Metrix score of 9.16. Insiders are buying large chunks of JPMorgan stocks. While I am not a big fan of financial stocks, I think the recent sell-off offers a nifty entry point for JPMorgan.
Phillip Morris is among the best picks of Renaissance Technologies. Although the stock lost 1.39% in the last week, it returned 19% since January. Renaissance Technologies increased its holdings by 160% and invested 1.09% of its portfolio on Phillip Morris. Analysts have a mean target price of $76, implying about 12% upside potential. PM pays a nifty yield of 3.75%. As of the September 2 close, the stock is trading with a trailing P/E ratio of 15.62 and a low forward P/E ratio of 13.07. Debt/equity ratio of 4.61 is a red flag. Based on 11.57% EPS growth estimate, Phillip Morris International has an O-Metrix score of 5.34.
Johnson & Johnson returned 4.54% in a month, but lost 2.14% in the last quarter. Renaissance Technologies reduced its J & J holdings by 82% in the last quarter. Johnson & Johnson is a highly profitable company with a gross margin of 69.11% and operating margin of 22.18%. Its trailing P/E ratio is 15.33 and forward P/E ratio is 12.13. Analysts have a mean target price of $72.26, implying almost 14% upside potential. Dividend yield is 3.56%. Based on 6% EPS growth estimate, J & J has a relatively low O-Metrix score of 3.5.
Novartis lost 9.06% in a quarter, but year-to-date return of 1.36% is still in the positive territory. Renaissance Technologies sold out its Novartis holdings in the last quarter. Swiss-based Novartis has a gross margin of 69.02% and an operating margin of 20.81%. Its trailing P/E ratio is 13.51 and forward P/E ratio is 9.9. Analysts have a mean target price of $68.88, implying 17% upside potential. Dividend yield is 4.12%. Based on 4.75% EPS growth estimate, Novartis has an O-Metrix score of 3.79.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.