In this article, we discuss 10 blue chip stocks to buy according to billionaire Jim Simons. You can skip our detailed analysis of Renaissance Technologies’ strategy and the current market outlook and go directly to 5 Blue Chip Stocks to Buy According to Billionaire Jim Simons.
Jim Simons is a leading mathematician and investor who this year appeared on the Forbes list of U.S. billionaires, ranking 48th, with a net worth of $29 billion. He is the founder of Renaissance Technologies, a Setauket, New York-based hedge fund that manages. Its signature Medallion fund has delivered average annual returns of about 40% since 1988 and has paid him about $12 billion in cash distributions since 2006.
The investing approach of Simons is predicated on finding and identifying patterns in the market, i.e., moves that repeat over time and become predictable. Once they have been found, their level of dependability is evaluated through backtesting techniques. In 1978, Simons established the hedge fund Monemetrics, which enabled him to discover that pattern recognition could be applied to trade on the financial markets, and he subsequently included quantitative analysis into his investing strategy. He is hence known as the “Quant King”.
Jim Simmons’s hedge fund Renaissance Technologies manages 18 clients and has a portfolio value of $84.4 billion as of Q2. The fund has a top 10 holdings concentration of 10.97%. Renaissance Technologies’ biggest holding is Novo Nordisk A/S (NYSE:NVO), with 17,529,671 shares held.
Investors in the United States were taken off guard as a hotter-than-expected inflation number wiped more than $1.5 trillion off the S&P 500 on Tuesday, virtually erasing a four-day rise. Across the board, selling drove the S&P 500 down more than 4.3% to its worst day since June 2020, while the tech-heavy Nasdaq 100 losses reached 5%, with the major mega-cap technology stocks taking the most damage.
While the magnitude of Tuesday’s drop was significant, the S&P 500 only reversed gains made in the previous four sessions that had been fueled by expectations of a softer reading on the U.S. consumer price index.
Tuesday’s selling was most intense in speculative market segments that are most susceptible to rising interest rates. This category includes technology since stock values are dependent on anticipated future earnings, which are discounted as interest rates rise. On Tuesday, every single stock on the Nasdaq 100 was in the red.
Given the market volatility and the potential for more Fed interest rate raises, stocks could fall even further if economic data doesn’t meet expectations. Nevertheless, the lower prices provide an opportunity for long-term investors to buy blue chip companies at potentially attractive valuations.
Jim Simons of Renaissance Technologies
Our Methodology
For our list of 10 Blue Chip Stocks to Buy According to Billionaire Jim Simons, we took 10 companies from Jim Simons’ Renaissance Technologies’ 13F portfolio at the end of Q2 2022 that had a mixture of growth potential, sector leadership, and defensive qualities. We then ranked them from #10 to #1. We also included the number of hedge funds in our database that held shares in the same stock in Q2.
10 Blue Chip Stocks To Buy According To Billionaire Jim Simons
10. American Express Company (NYSE:AXP)
Renaissance Technologies Stake Value: $372 million
Percentage of Renaissance Technologies’ Portfolio: 0.44%
Number of Hedge Fund Holders: 67
American Express Company (NYSE:AXP) is a multinational financial company operating in around 130 countries that provides charge and credit card payment solutions to individuals and companies. Additionally, the corporation owns an extremely lucrative merchant payment network.
The financial company is a blue chip that has not seen much weakness in terms of the American consumer. American Express CFO Jeffrey Campbell when asked while speaking at the Barclays Global Financial Services Conference about consumer spending having increased through Q2 and whether that momentum has held up so far in Q3, replied:
“Well, so the short answer is yes. And in fact, I said a few minutes ago that our confidence level in the multiyear growth plan we laid out back in January really higher than it was back in January. And so if you think about all of the trends that we talked about in sort of excruciating detail back on the July earnings call, they really all continued. So goods and services spending continues to look very strong. The U.S. consumer continues to look very strong..”
At the end of Q2 2022, 67 hedge funds tracked by Insider Monkey owned stakes in American Express Company (NYSE:AXP). Berkshire Hathaway was the stock’s leading stakeholder in Q2, owning American Express Company (NYSE:AXP) shares worth over $21 billion.
Like Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT), American Express Company (NYSE:AXP) is one of the blue chip holdings of billionaire Jim Simon’s Renaissance Technologies in Q2.
9. Colgate-Palmolive Company (NYSE:CL)
Renaissance Technologies Stake Value: $390 million
Percentage of Renaissance Technologies’ Portfolio: 0.46%
Number of Hedge Fund Holders: 55
Since its establishment in 1806, Colgate-Palmolive Company (NYSE:CL) has developed into a global leader in consumer products. In addition to its oral care line, the company also develops shampoos, shower gels, deodorants, and home care items that are distributed in over 200 countries. International sales account for approximately 70% of the company’s consolidated revenue.
Colgate-Palmolive Company (NYSE:CL) performed well in Q2 2022 and reported revenue of $4.48 billion, up 5.26% YoY. The company posted a normalized EPS of $0.72, beating the market consensus estimates by $0.01.
At the end of Q2 2022, 55 hedge funds tracked by Insider Monkey owned stakes in Colgate-Palmolive Company (NYSE:CL). First Eagle Investment Management was the stock’s leading stakeholder in Q2, owning Colgate-Palmolive Company (NYSE:CL) shares worth over $899 million.
8. JPMorgan Chase & Co. (NYSE:JPM)
Renaissance Technologies Stake Value: $442 million
Percentage of Renaissance Technologies’ Portfolio: 0.52%
Number of Hedge Fund Holders: 104
With approximately $4 trillion in assets, JPMorgan Chase & Co. (NYSE:JPM) is one of the largest and most sophisticated financial organizations in the United States. Consumer and community banking, corporate and investment banking, commercial banking, and asset and wealth management are its four key segments. Given the bank’s scale, JPMorgan Chase & Co. (NYSE:JPM) is one of the leading blue chips in the financial sector.
Matt O’Connor from Deutsche Bank lowered the price target on JPMorgan Chase & Co. (NYSE:JPM) shares to $155 from $174 while keeping a buy rating on the stock. O’Connor informed investors in a research note that the banks have underperformed this year mostly due to worries of a recession. Since January’s high, bank stocks have declined by around 25%, and the probability of a moderate-to-severe recession is currently priced in at between 55% and 60%.
At the end of Q2 2022, 104 hedge funds tracked by Insider Monkey owned stakes in JPMorgan Chase & Co. (NYSE:JPM). Fisher Asset Management was the stock’s leading stakeholder in Q2, owning JPMorgan Chase & Co. (NYSE:JPM) shares worth over $899 million.
7. PepsiCo, Inc. (NASDAQ:PEP)
Renaissance Technologies Stake Value: $454 million
Percentage of Renaissance Technologies’ Portfolio: 0.53%
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NASDAQ:PEP) is one of the world’s major beverage and food corporations. It manufactures, promotes, and sells several beverages and food brands, such as Pepsi, Mountain Dew, Gatorade, Doritos, Lays, and Ruffles.
Recently, PepsiCo, Inc. (NASDAQ:PEP) announced that it has entered into a strategic partnership with Aqua Carpatica, a Romanian spring water company, whereby PepsiCo, Inc. (NASDAQ:PEP) would possess a 20% share in Aqua Carpatica. PepsiCo will have the right to distribute the spring water in Romania and Poland, with the potential to extend to additional countries, including the United States, under the terms of the deal.
ClearBridge Investments mentioned PepsiCo, Inc. (NASDAQ:PEP) in its second-quarter 2022 investor letter. Here is what the firm had to say:
“Also in the stable and predictable cash flow camp, though with a very different business model, global food and beverage company PepsiCo (PEP) reported very strong organic growth in the first quarter, driven by healthy price/mix, and raised revenue guidance, while holding EPS guidance. Notably, its beverage business showed expanding margins.”
At the end of Q2 2022, 65 hedge funds tracked by Insider Monkey owned stakes in PepsiCo, Inc. (NASDAQ:PEP). Fundsmith LLP was the stock’s leading stakeholder in Q2, owning PepsiCo, Inc. (NASDAQ:PEP) shares worth over $1.1 billion.
6. The Home Depot, Inc. (NYSE:HD)
Renaissance Technologies Stake Value: $480 million
Percentage of Renaissance Technologies’ Portfolio: 0.56%
Number of Hedge Fund Holders: 80
The Home Depot, Inc. (NYSE:HD) is the biggest home improvement specialty retailer in the world, operating over 2,300 warehouse-format shops and providing over 30,000 goods in-store and 1 million products online in the United States, Canada, and Mexico. Its stores include a wide selection of construction supplies, home improvement products, lawn and garden products, and home décor items, as well as a variety of services, including home improvement installation services and tool and equipment rentals.
Analyst Scot Ciccarelli increased his price target on The Home Depot, Inc. (NYSE:HD) from $375 to $399 and maintained a buy rating on the stock. Despite macroeconomic concerns, the company’s Q2 earnings were solid, and its business trends remain good, the analyst wrote in a research note for investors.
At the end of Q2 2022, 80 hedge funds tracked by Insider Monkey owned stakes in The Home Depot, Inc. (NYSE:HD). Fisher Asset Management was the stock’s leading stakeholder in Q2, owning The Home Depot, Inc. (NYSE:HD) shares worth over $2.2 billion. Renaissance Technologies owned $480 million, ranking it #6 on our list of 10 Blue Chip Stocks to Buy According to Billionaire Jim Simons.
Alongside The Home Depot, Inc. (NYSE:HD), Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT) are blue chip holdings of billionaire Jim Simons’ Renaissance Technologies at the end of Q2.
Click to continue reading and see 5 Blue Chip Stocks to Buy According to Billionaire Jim Simons.
Suggested Articles:
- 10 Tech Stocks to Buy According to Billionaire Warren Buffett
- 10 Best-Performing S&P 500 Stocks in the Last 10 Years
- Top 10 Stock Picks of Henrik Rhenman’s Rhenman Partners
Disclosure: None. 10 Blue Chip Stocks to Buy According to Billionaire Jim Simons is originally published on Insider Monkey.
