Renaissance Technologies, founded by Jim Simons, has been one of the most successful investment funds in history and has made Simons a multi-billionaire. Hedge funds such as Renaissance issue quarterly 13F filings six to seven months after the end of each quarter to disclose their long equity holdings as of the end of that quarter (so the most recent batch is for the end of December). Even though there is a lag in 13Fs it is still possible to develop profitable investment strategies based on the included information; we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (read more about imitating small cap picks). We can also see what stocks hedge funds live in different industries or sectors. Read on for our brief take on Renaissance’s top five tech picks as of the end of December or see the full list of stocks the fund reported owning.
The fund owned nearly 20 million shares of Intel Corporation (NASDAQ:INTC) at the end of the fourth quarter of 2012. Intel trades at 10 times earnings whether we compare its $106 billion market cap to trailing earnings or to analyst consensus for 2014; the stock has fallen 23% in the last year as the markets worry that changes in personal computing will hurt the company. Earnings were down 27% last quarter compared to the fourth quarter of 2011. Billionaire Ken Fisher’s Fisher Asset Management reported a position of over 18 million shares (find Fisher’s favorite stocks). We’d note that at current dividend levels Intel’s yield is over 4%.
See three more of Renaissance’s tech stocks:
Renaissance disclosed ownership of 8.2 million shares of Linear Technology Corporation (NASDAQ:LLTC), an $8.7 billion market cap designer of integrated circuit products. Growth was very modest in the company’s most recent quarter compared to the same period in the previous fiscal year, with neither revenue nor net income changing by more than 4%, yet the trailing earnings multiple is higher than 20. First Eagle Investment Management was another major shareholder of Linear Technology, with over 14 million shares in its portfolio.
The investment team liked Priceline.com Inc (NASDAQ:PCLN), more than tripling their stake in the travel website to about 390,000 shares. Priceline has been an excellent growth story over the last several years, and in the fourth quarter of 2012 both revenue and earnings were over 20% higher from their levels a year earlier. The stock carries trailing and forward P/Es of 25 and 15, respectively. A number of Tiger Cub funds, including billionaire Stephen Mandel’s Lone Pine Capital, have Priceline as one of their largest holdings (research more stocks Mandel likes).
Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) rounds out our list of Renaissance’s top stock picks from the technology sector. The stock is at least a potential value prospect, given its earnings multiples in the teens and the fact that both revenue and earnings have been up strongly- as with Priceline, each grew more than 20% over the last year. Cliff Asness’s AWT Capital Management increased its holdings of Taiwan Semiconductor Manufacturing between October and December to a total of 3.2 million shares (see more stocks Asness was buying).
Disclosure: I own no shares of any stocks mentioned in this article.
