Euclidean Capital is the family office of billionaire hedge fund manager James “Jim” Simons. The hedge fund manages the private fortunes of Jim Simons, the 28th richest person in the world with a personal net worth of $24.4 billion as of January 28. Jim Simons is said to have revolutionized investing when he left academics to start trading at the age of forty. Simons founded his quantitative-focused fund Renaissance Technologies in 1982, banking on his expertise and skills as a distinguished mathematician, lecturer, and code breaker to look at the market in a fundamentally different manner. Despite retiring in 2010, Simons continues to play an important role at Renaissance.
Jim Simons established Euclidean Capital in 2009. The hedge fund is mostly focused on innovative biotech companies and AI-based firms. The current composition of the holdings reveals a bias towards biotech players such as Foghorn Therapeutics Inc. (NASDAQ:FHTX), Tenaya Therapeutics, Inc. (NASDAQ:TNYA), and Alector, Inc. (NASDAQ:ALEC). According to Bloomberg, Euclidean Capital has invested in at least six artificial intelligence-focused companies since the beginning of 2020, encompassing health care, consumer services, and aviation. Simons has used machine learning and artificial intelligence to make investment decisions, abandoning the traditional hiring of Wall Street employees in place of data scientists who can easily analyze statistics.
In November 2021, Euclidean Capital participated in a round of funding for data-privacy company Duality Technologies. It also took part in a funding round led by DroneBase, an aerial data management platform that uses AI for its analytics. Moreover, Euclidean is also supporting companies such as Dascena, a machine learning diagnostics company, and Codagenix, a biotech business working on a Covid-19 vaccine. Jim Simons’ Euclidean Capital has a portfolio value of over $205.7 million as of Q3 2021.
Jim Simons of Renaissance Technologies
Our Methodology
In this article, we will be discussing the top 10 stock picks of Jim Simons’ Euclidean Capital. We picked these stocks from the Q3 13F portfolio of Euclidean Capital.
10 Best Biotech and AI Stocks To Buy
10. Pinduoduo Inc. (NASDAQ:PDD)
Jim Simons’ Euclidean Capital’s Stake Value: $1,112,000
Percentage of Jim Simons’ Euclidean Capital’s 13F Portfolio: 0.54%
Number of Hedge Funds: 49
Pinduoduo Inc. (NASDAQ:PDD) is one of the three most prominent e-commerce players in China, along with Alibaba Group Holding Limited (NYSE:BABA) and JD.com, Inc. (NASDAQ:JD). However, Pinduodo and JD are pure plays related to digital shopping. If we drill down further into the operations of JD and Pinduoduo, we will find out that JD relies on its fleet to deliver the orders, while Pinduoduo Inc. (NASDAQ:PDD) relies upon a third-party logistics provider. Pinduoduo Inc. (NASDAQ:PDD) is more focused on the user experience and driving the youth to its platform. As a result, it has more daily active users (DAU) than Alibaba and JD.
Pinduoduo Inc. (NASDAQ:PDD) has higher costs associated with outside logistics partners. Still, the company’s CEO Chen Lei thinks that this move will create another wave of innovation in the logistics industry. The company is currently not interested in incurring high capital expenditure to create its own in-house logistics operations for order delivery.
In a note issued to investors on December 7, Ellie Jiang at Macquarie resumed coverage on Pinduoduo Inc. (NASDAQ:PDD) with an Outperform rating and a $95 price target. The analyst thinks that the earning power of Pinduoduo is underestimated by the broad market and its focus on agriculture will ensure that the company achieves continuous and sustainable frequency of purchase and an increase in revenue per user. The company is working hard to achieve one-third of the gross merchandise volume (GMV) of Alibaba by the end of 2023.
Investment management firm Baillie Gifford mentioned Pinduoduo Inc. (NASDAQ:PDD) in its Q2 2021 investor letter. Here’s what the firm said:
“As many countries enjoy a relaxation of Covid restrictions, Mr Market is focused on short-term beneficiaries of ‘the pleasure after the plague’. There are interesting parallels with the Roaring 20s here, but to our minds, they extend beyond post-pandemic hedonism. Much of the new wealth created in the 1920s was patchily distributed and accompanied by a pervasive sense that the older generation had let down younger people. In 1920, John F. Carter, an irate 23-year-old wrote “the older generation had certainly pretty well ruined this world before passing it on to us. We have been forced to live in an atmosphere of ‘tomorrow we die,’ and so, naturally, we drank and were merry.”
In a similar vein, some of the greatest Growth opportunities are materialising from the companies that are shifting humankind towards more sustainable ways of consuming by driving efficiencies and eliminating surplus. Pinduoduo’s ‘farm to table’ platform is one example – cutting out huge waste in farm produce and short circuiting layers of infrastructure by matching Chinese food supply and demand through a group buying model. In a similar vein, Meituan is well on the way to developing China’s primary ‘Software as a Service’ ecosystem for food distribution which we believe has a strong chance of replacing wasteful wet markets as the primary channel for transacting in produce.
Pinduoduo’s share price pulled back following news that Chinese regulators are investigating possible anti-competitive activities by the country’s large online companies. However, Pinduoduo appears well placed to navigate such regulatory scrutiny in the long-term, helped in part by its community buying business model that benefits consumers, manufacturers and farmers alike. Its business fundamentals are stellar– the company remains the largest Chinese e-commerce platform, with over 820 million annual active users (surpassing Alibaba and JD.com), while revenue growth increased by 239% over the previous year. “
9. First Financial Bancorp. (NASDAQ:FFBC)
Jim Simons’ Euclidean Capital’s Stake Value: $4,063,000
Percentage of Jim Simons’ Euclidean Capital’s 13F Portfolio: 1.97%
Number of Hedge Funds: 7
First Financial Bancorp (NASDAQ:FFBC) is a banking institution based out of Cincinnati, Ohio, that provides commercial lending, consumer credit, credit card, personal loans, real estate lending, and other forms of debt services to its customers. The bank operates through 139 full banking centers located across Indiana, Kentucky, Ohio, and Michigan. As of September 30, 2021, First Financial Bancorp (NASDAQ:FFBC) had $16 billion in assets, $9.4 billion in loans, $12.7 billion in deposits, and $2.2 billion in shareholders’ equity. Meanwhile, the Wealth Management division of the business has $3.2 billion worth of assets under management (AUM) as of September 30, 2021.
Jim Simons’ Euclidean Capital has a stake worth $4.06 million in First Financial Bancorp (NASDAQ:FFBC) as of Q3 2021, representing 1.97% of the overall portfolio. Euclidean Capital initiated a position in the stock in Q4 2020.
In December 2021, First Financial Bancorp (NASDAQ:FFBC) revealed that it had bought Summit Funding Group, the fourth biggest independent equipment financing platform in the US. Following the acquisition, Summit will become a separate division of First Financial Bancorp (NASDAQ:FFBC). It will continue to operate with its current leadership team under the leadership of founder and CEO Rick Ross. First Financial Bancorp intends to close this deal by Q4 2021. The deal is expected to add mid-single-digit to the EPS during the first year of integration (2022) and contribute low-double-digit to the EPS in the long-term.
8. Surrozen, Inc. (NASDAQ:SRZN)
Jim Simons’ Euclidean Capital’s Stake Value: $5,685,000
Percentage of Jim Simons’ Euclidean Capital’s 13F Portfolio: 2.76%
Number of Hedge Funds: 18
Surrozen, Inc. (NASDAQ:SRZN) is a biopharmaceutical corporation working on treating diseases connected to tissue injury by activating the Wnt pathway with targeted antibodies. The company’s therapeutics aim to repair various types of tissues and damaged organs. The San Francisco, California-based entity has two lead candidates in the form of SZN-1326 and SZN-043 at the preclinical trial stage. Surrozen, Inc. (NASDAQ:SRZN) aims to take both these therapeutics to Phase 1 of the clinical trials in healthy candidates by Q3 2022. SZN-1326 has been developed to treat moderate to severe Ulcerative Colitis and brought the company’s SWAP technology into play. Meanwhile, SZN-043 is aimed towards the treatment of Severe Alcoholic Hepatitis. Surrozen, Inc. (NASDAQ:SRZN) is a new entrant in Jim Simon’s portfolio.
On October 11, Tazeen Ahmad at Bank of America started coverage on Surrozen, Inc. (NASDAQ:SRZN) with a Buy rating and a price target of $11. The analyst considers the stock a high risk and high reward play at an early stage and without the presence of any meaningful data until 2023.
Of the 867 hedge funds being tracked by Insider Monkey at the end of Q3, 18 held a stake in Surrozen, Inc. (NASDAQ:SRZN). The cumulative value of the stake was over $66.8 million.
7. ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC)
Jim Simons’ Euclidean Capital’s Stake Value: $16,251,000
Percentage of Jim Simons’ Euclidean Capital’s 13F Portfolio: 7.89%
Number of Hedge Funds: 10
ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) was founded in 2014 and has been a constituent of Euclidean Capital’s portfolio since Q4 2020. ORIC stands for Overcoming Resistance in Cancer. The San Francisco, California-based company is working towards developing innovative therapies that enhance the impact of cancer therapies for a longer duration of time. During the initial phase, ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) found that a molecule known as the glucocorticoid receptor (GR) results in resistance to various cancer therapies like anti-hormonal therapy, chemotherapy, and immunotherapy.
ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) posted an EPS of -$0.47 for Q3 2021, beating the analysts’ estimate by $0.11. The company’s EPS estimate for the next quarter stands at -$0.55.
ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) also revealed that it had received Clinical Trial Application (CTA) from the regulatory authorities in the Republic of Korea for ORIC-114 for a particular group of patients with advanced solid tumors. This is the third investigational new drug (IND) approval or CTA for ORIC-114 in the last eight months. Furthermore, ORIC Pharmaceuticals, Inc. (NASDAQ:ORIC) is on course to reveal five clinical updates for its four therapeutics by the first half of 2023.
6. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM)
Jim Simons’ Euclidean Capital’s Stake Value: $17,494,000
Percentage of Jim Simons’ Euclidean Capital’s 13F Portfolio: 8.5%
Number of Hedge Funds: 22
NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is a biotech company developing therapeutics using a biology-centric drug discovery approach to unveil unique mechanisms of action and generate proprietary insights. The system quickens the process of getting the therapeutics into the proof-of-concept clinical trial stage. Presently, the pipeline of NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is targeted towards treating cancer, liver, metabolic, and retinal diseases.
NGM120 is one of the lead candidates of NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). It is in Phase 2 of the FDA approval and has been developed to treat metastatic pancreatic cancer and cachexia. For the treatment of geographic atrophy, the company also has NGM621 in Phase 2 of the FDA trials.
In an update issued to investors on January 7, Swapnil Malekar at Piper Sandler maintained an Overweight rating on NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) and increased the price target from $30 to $32. The analyst has suggested investors go long on the stock on expected updates related to the Phase 2 trial of CATALINA and NGM621. The stock has been a part of Euclidean Capital’s portfolio since Q4 2020.
Click to continue reading and see 5 Best Biotech and AI Stocks To Buy Now.
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Disclosure: None. 10 Best Biotech and AI stocks to Buy is originally published on Insider Monkey.
