Jim Simons is a rock star in the finance industry. In addition to becoming one of the world’s richest men, Simons can also boast two funds that have returns over 30% so far this year. He uses computer-based models to manage his Renaissance Technologies, even going so far as to automate many of his trades, and he has done well at it. High double digit returns are no anomaly for Simons.
In 2010, his Medallion fund returned 30%, compared to the S&P 500’s 15.1%. Part of Simons strategy is to exploit even the smallest market inefficiencies. As such, he has an exceptionally broad portfolio. As of the end of the third quarter, he had 2598 positions under his management, 434 of which were new positions.
Jim Simons’ Top Holdings
Simons’ top holding at the end of the third quarter was Apple (AAPL). Simons decreased his position by 282,219 shares, bringing his stake in the company from $445.8 million to $398.9 million. It had been Simons’ largest position at the end of the second quarter as well. David Einhorn was also bullish on AAPL in the third quarter. Simons’ second largest position at the end of September was Philip Morris (PM) after he increased his position in the company by 73.21%, bringing his stake in the company to 6,287,000 shares, a value of $392.2 million.
Simons also upped his position in Lorillard (LO) and McDonalds (MCD) in the third quarter. Eli Lilly & Co (LLY), which had been Simons’ second largest position at the end of the second quarter, fell to his fifth largest position after Simons cut his stake in LLY by 31.31%, bringing his position from 10,335,005 shares or a value of $387.9 million to 7,099,600 shares or a value of $262.5 million at the end of September.
Simons introduced several new positions during the third quarter. The largest of these new positions is Microsoft. The company was Simons’ seventh largest position at the end of the third quarter, after he bought 9,525,584 shares. Simons’ MSFT stake is currently valued at $237.1 million.
Simons also initiated a large new position in Schlumberger in the third quarter. It is currently valued at $191.1 million, making it the 12th largest position in his portfolio. Simons also initiated new positions in 3M Co (MMM), Freeport McMoRan Copper & Gold (FCX), Halliburton (HAL), National Oilwell (NOV), Rio Tinto (RIO), Peabody Energy (BTU) and Qualcomm (QCOM).
Jim Simons’ Bearish Moves
Simons sold out of several large cap companies in the third quarter. He divested his position in ExxonMobil (XOM), Verizon Communications (VZ), General Electric (GE), AT&T (T), Amazon.com (AMZN), Research in Motion (RIMM) and PepsiCo (PEP). XOM had been Simons’ 9th largest position at the end of June, while GE had been his 29th largest holding. Simons reduced more than 500 positions in the third quarter. Besides AAPL and LLY, other top reductions in Simons’ portfolio during the third quarter, include Intel (INTC), Colgate-Palmolive (CL) and Bristol-Myers Squibb (BMY).
Jim Simons is one of our favorite hedge fund managers. We like his top picks Apple and Philip Morris a lot. We also like his new bets on undervalued technology companies and basic materials and energy stocks. It isn’t easy to deliver a 30% return in this environment. We believe investors will be able to beat the market over the long term by focusing on Simons’ top positions.