5 Best Stocks To Buy According To 4 Billionaire Quants

1. Gilead Sciences Inc. (GILD)

Gilead Sciences Inc. (NASDAQ:GILD) is the only stock in our list that all four quant hedge funds have very large positions in. Two Sigma’s biggest position in its well diversified portfolio is GILD. D.E. Shaw had more than $500 billion invested in stock followed by AQR’s nearly half a billion dollars position. These two funds are also the #1 and #2 hedge fund holders of Gilead. Renaissance Technologies ranked 7th with its $153 million position. Two Sigma ranks 10th with its $137 million stake. Gilead shares returned 7% year-to-date, though the stock declined by more than 15% since early August.

What do these quant hedge funds see in Gilead? The answer is simple. Gilead earned $7.35 a share in 2014 and it will probably earn more than $11 in 2015. Sell-side analysts also expect the company earn an average of $11.60 in 2016. This means Gilead is trading at less than 9 times current and forward earnings. This is an extremely low multiple for a stock that has been growing and is expected to grow its earnings. All quantitative value investing models must be giving “buy” signals for Gilead at the moment. Even Joel Greenblatt’s “magic formula” strategy is sending a buy signal. Gilead was the #1 position in Greenblatt’s portfolio at the end of June too.

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