In this article, we discuss 5 supply chain stocks to buy now according to billionaire Jim Simons. If you want to check out our detailed analysis of Renaissance Technologies and Jim Simons’ investment philosophy, go directly to 10 Supply Chain Stocks to Buy Now According to Billionaire Jim Simons.
5. Norfolk Southern Corporation (NYSE:NSC)
Renaissance Technologies’ Stake Value: $107.6 million
Percentage of Renaissance Technologies’ 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 48
Number five on the list of 10 supply chain stocks to buy now according to billionaire Jim Simons is Norfolk Southern Corporation (NYSE:NSC). The company operates a Class-I railroad in the US through its subsidiary Norfolk Southern Railway. Norfolk Southern Corporation (NYSE:NSC) is a dividend paying stock with a yield of 2.15% as of June 24. Its most recent quarterly dividend payout was $1.24 per share, paid on May 20 to shareholders of record on May 6.
Norfolk Southern Corporation has only been growing its dividend for the past two years, an indication that the company does not have a strong track record of dividend-growing. However, its dividend payout ratio is at 40%, well in the sustainable levels and given the company’s growth prospects, there’s a fair shot it can build a good dividend paying record.
4. United Parcel Service, Inc. (NYSE:UPS)
Renaissance Technologies’ Stake Value: $155.6 million
Percentage of Renaissance Technologies’ 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 50
United Parcel Service, Inc. (NYSE:UPS) is a Fortune-500 supply chain management and shipping company headquartered in Atlanta, Georgia. It’s mostly famous for ground shipping services although it offers air shipping as well.
UPS is a high dividend paying stock with a dividend yield of 3.32% as of June 24. It made its most recent quarterly payment of $1.52 per share on June 2 to shareholders of record on May 16. The company has an established history of dividend payments and has been growing its dividend non-stop for the past 14 years.
Here’s what ClearBridge Investments had to say about UPS in their Q4 2021 investor letter:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic. These consistent growers were complemented by solid contributions from structural holdings including United Parcel Service.”
3. CSX Corporation (NASDAQ:CSX)
Renaissance Technologies’ Stake Value: $239 million
Percentage of Renaissance Technologies’ 13F Portfolio: 0.28%
Number of Hedge Fund Holders: 72
CSX Corporation (NASDAQ:CSX) is one of the world’s leading suppliers of rail-based freight transportation in the US and Canada. A total of 72 hedge funds own shares in the company as of the first quarter of 2022 with the total equity ownership by these funds amounting to over $6 billion.
CSX corporation has a dividend yield of 1.35% as of June 24. The shareholders of record on May 31 were paid the quarterly dividend of $0.10 per share on June 15.
On April 18, CSX was downgraded to Hold from Buy with a price target of $38, down from $41, by TD Securities analyst Cherilyn Radbourne who sees rising risks to sector volumes owing to both supply-chain constraints and crew resources. While CSX Corporation has been ahead of the curve up to this point on the labor front, the analyst is increasingly concerned that new crews may be completing training just as downside risks to volume mount.
The leading stakeholder in the company is Soroban Capital Partners which as of Q1 2022, holds shares in the company worth over $1.5 billion.
ClearBridge Investments discussed the company in their Q4 2021 investor letter. Here’s what was said:
“On a regional basis, the U.S. and Canada was the top contributor to quarterly performance, of which U.S. rail operators CSX was among the lead performers. CSX is one of five leading North American rail companies, with over 21,000 miles of rail, covering 23 states and 40+ ports. CSX is engaged in the transportation of rail freight in the Southeast, East, and Midwest via interchange with other rail carriers, to and from the rest of the U.S. and Canada. CSX performed well during the quarter after the company beats market expectations on its third-quarter results. The beats were largely driven by strong pricing, which could be hitting record highs, and healthy commodity/coal volume driven by the current energy crisis.”
2. Union Pacific Corporation (NYSE:UNP)
Renaissance Technologies’ Stake Value: $278 million
Percentage of Renaissance Technologies’ 13F Portfolio: 0.32%
Number of Hedge Fund Holders: 89
Union Pacific Corporation (NYSE:UNP) is a freight-hauling railroad operator with 8,300 locomotives and routes across 23 US states. The company provides shipping services for a wide variety of materials.
On June 21, Barclays analyst Brandon Oglenski lowered his price target on Union Pacific to $255, down from $290 and kept an Overweight rating on the stock. The analyst said that the company is likely to remain one of the biggest and most important industrial stocks looking forward as the management leverages a growth strategy with a low cost network.
UNP is a dividend paying company. Its recent quarterly dividend of $1.30 per share will be paid out on June 30 to shareholders of record on May 31. The company is reliable in the dividend domain and has been growing its payouts consecutively for 17 years.
ClearBridge Investments mentioned Union Pacific in their Q4 2021 investor letter titled, “Global Growth Strategy”. Here is what they said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. These consistent growers were complemented by solid contributions from structural holdings including Union Pacific.”
1. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Renaissance Technologies’ Stake Value: $295 million
Percentage of Renaissance Technologies’ 13F Portfolio: 0.34%
Number of Hedge Fund Holders: 32
The number one on the list of 10 supply chain stocks to buy now according to billionaire Jim Simons is ZIM Integrated Shipping Services Ltd. (NYSE:ZIM). ZIM recently paid a quarterly dividend of $2.85 per share on June 8 to shareholders of record on May 31.
On June 17, JPMorgan analyst Samuel Bland upgraded ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) to Neutral from Underweight with a price target of $53.30 from $43.60. Bland sees “asymmetric valuation risk” across the logistics sector.
Evermore Global Advisors discussed ZIM in their Q2 2021 “Evermore Global Value Fund” investor letter. Here’s what they had to say.
“ZIM Integrated Shipping Services (ZIM) was the largest contributor to the Fund’s performance during the second quarter. With a market cap of $5.2 billion, ZIM is an Israel-based containership operator that had its initial public offering on the New York Stock Exchange this past January. As a reminder, we discussed ZIM at length in the Q1 2021 quarterly commentary as one of the new investments that we initiated during that period.
There were several notable developments during the second quarter. Given the company’s unique asset light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows. ZIM ended the period with approximately $1.25 billion in cash and about $915 million in net debt. Due to the strong operational performance, the company further strengthened its balance sheet by redeeming its Series 1 and Series 2 unsecured notes due in 2023. With the early redemption of the unsecured notes, ZIM was no longer subject to certain dividend restrictions, and it declared a special dividend of $2 per share, which will be payable on Sept 15th (goes ex on August 24th). Lastly, management revised its 2021 full year EBITDA guidance from $1.4 – 1.6 billion to $2.5 – $2.7 billion, which was a sizable increase compared to the levels set last March. To that end, we continue to have high conviction in our position in ZIM.”
You can also take a peek at 10 Dividend Stocks to Buy According to Kenneth Tropin’s Graham Capital Management and Top 5 Stock Picks of Michael Pausic’s Foxhaven Asset Management
