5 Best Technology Stocks According To This $32 Billion Market-Beating Fund

Renaissance Technologies has been not only one of the best performing quant based asset managers but also one of the best performing hedge fund across different strategies. In 2016, Renaissance Institutional Equities Fund has proven its mettle by returning an overwhelming 19.4% even as other top hedge funds such as Bridgewater Associates and Paulson & Co. have underperformed the broader markets. The fund has been ranked as one of the top performing funds with a three-year compounded return of over 17% in 2015. Renaissance Institutional Equities Fund has been closed to outside investors since 1993 and only has funds invested by employees and their families. Renaissance Technologies was founded in 1982 by Jim Simons, who is an award-winning mathematician and former Cold War code-breaker. He is widely known as the best money manager on earth because of his stellar performance over the years. In the article below, we look at some of the top technology picks of the fund.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Linear Technology Corporation (NASDAQ:LLTC) is a niche semiconductor company, which is engaged in the manufacturing of analog integrated circuits. Linear Technology Corporation (NASDAQ:LLTC) was the biggest technology position of Renaissance Technologies with the fund holding more than 8.7 million shares worth $516 million as of the end of September. Renaissance acquired 1.3 million shares during the third quarter. Linear Technology Corporation (NASDAQ:LLTC) has performed spectacularly over the last year returning over 47%. The company reported $373 million in revenue for its last quarter, with net income coming at $115 million. While the number of funds from our database long Linear Technology Corporation (NASDAQ:LLTC) increased by six to 31 during the third quarter, the value of their positions declined to $1.62 billion from $1.93 billion.

In NetEase Inc. (ADR) (NASDAQ:NTES), Renaissance amassed 1.99 million shares worth $479 million at the end of September, down by 398,000 shares over the quarter. NetEase Inc. (ADR) (NASDAQ:NTES) is one of the biggest producers of online games in China with millions of subscribers. Besides gaming, the company is also present in providing email and e-commerce businesses. Arrowstreet Capital Management increased its position by 711,000 shares to 1.17 million shares during the third quarter. Israel Englander’s Millennium Management was another notable hedge fund which started a new position in the stock by purchasing 233,000 shares worth $56 million. NetEase Inc. (ADR) (NASDAQ:NTES)’s stock has advanced by more than 19% over the last year. At the end of the third quarter, 39 funds tracked by us held shares worth $2.97 billion, versus 27 funds owning $2.8 billion worth of stock a quarter earlier.

During the third quarter, Renaissance Technologies acquired 476,648 class A shares of Alphabet Inc. (NASDAQ:GOOGL), boosting its holding to  524,048 shares worth $421.37 million. Though the stock has inched up by only 6% over the last year, it trades near the top of its annual trading range. Alphabet Inc. (NASDAQ:GOOGL) has a large number of potential revenue drivers for the future given its myriad investments in upcoming technology products and services such as maps, smartphones, self-driving car technology, etc. In its last quarterly report, the company topped analysts’ estimates on both revenues and earnings. The number of smart money managers followed by Insider Monkey long Alphabet Inc. (NASDAQ:GOOGL) went up by two to 137.

Verisign, Inc. (NASDAQ:VRSN) is one of the world’s largest domain name registrars of the Internets. Besides providing DNS services, the company has also diversified into providing security solutions to its extensive client base. Renaissance Technologies held 4.71 million shares worth $368 million at the end of the third quarter, making it the seventh largest holding of the fund. Warren Buffett’s Berkshire Hathaway is another investor bullish on Verisign, Inc. (NASDAQ:VRSN) holding shares worth over $1 billion. The stock has not done well over the last year losing 11% of its value though it has more than doubled over the last five years. Verisign, Inc. (NASDAQ:VRSN) is highly profitable having registered a net margin of almost 40% on revenue of $287 million during its last quarter. According to our database, 26 hedge funds held shares of Verisign at the end of September, compared to 30 funds at the end of June.

Renaissance Technologies was bullish on Microsoft Corporation (NASDAQ:MSFT) during the third quarter as it bought 3.99 million shares increasing its total holding to 6.10 million shares valued at $351 million. Microsoft Corporation (NASDAQ:MSFT) has performed extremely well under Satya Nadella’s leadership who has turned around this behemoth which was floundering under its former CEO, Steve Ballmer. The company has become a major force in new technology growth areas such as cloud computing. Microsoft Corporation (NASDAQ:MSFT)’s stock has been one of the best-performing technology mega caps, showing a gain of over 17% over the last year. The number of investors from our database with stakes in Microsoft declined to 126 from 131 during the third quarter, while the aggregate value of their positions fell to $18.1 billion from $18.8 billion.

Disclosure: None