In this article we will take a look at the 10 stocks Jim Simons’ quant hedge fund is buying. You can skip our detailed analysis of Simons’ history, investment philosophy, and hedge fund performance, and go directly to Jim Simons’ Quant Hedge Fund is Buying These 10 Stocks.
Billionaire investor and mathematician Jim Simons is known as the ‘Quant King’ in the world of hedge funds, owing to the staggering success of his New York-based quantitative trading hedge fund, Renaissance Technologies. After an esteemed career in academia, Simons eventually stepped into the world of finance in 1978 and founded Monemetrics, the preceding hedge fund to Renaissance Technologies. After few years of experimenting in financing, Jim Simons realized that he could make use of quantitative analysis to make investment gains from market inefficiencies. Thus he began his approach towards investing by solely applying mathematical and statistical modeling and research to interpret market data, searching for non-random movements in the financial data of the stocks he considered trading, thereby predicting future returns in his investments.
Ever since its formation, the Medallion hedge fund, Jim Simons’ secretive fund and a flagship of Renaissance, has produced groundbreaking results despite being closed to outside investors, with $55 billion in profits over the last 28 years. Renaissance Technologies, as an investment fund, manages more than $80 billion in its investment portfolio. Renaissance Technologies’ portfolio is diversified across 13 distinct sectors, with the Healthcare sector as the largest, accounting for 15.6% of the fund’s total portfolio. A majority of the companies in the fund’s portfolio are large-cap stocks, with stocks sizing up to more than $10 billion in market cap making up 12% of the fund’s total value.
Some of the notable stocks present in the investment portfolio of Renaissance Technologies at the end of the second quarter of 2021 include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), Moderna, Inc. (NASDAQ:MRNA), Microsoft Corporation (NASDAQ:MSFT) and NVIDIA Corporation (NASDAQ:NVDA), among others discussed in detail below.
Jim Simons of Renaissance Technologies
Our Methodology
With this background in mind, let us now look towards the 10 best stocks to buy according to Jim Simons’ Renaissance Technologies. We made use of Renaissance Technologies’ 13F portfolio for the second quarter for this analysis. The following list will consist of the top stocks that were added to Renaissance Technologies’ portfolio in the second quarter of 2021.
Why should we pay attention to Jim Simons’ stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
10. Analog Devices, Inc. (NASDAQ:ADI)
Simons’ Stake Value: $101.4 million
Percentage of Jim Simons’ 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 62
Analog Devices, Inc. (NASDAQ:ADI) is a Massachusetts-based technology company that manufactures and sells integrated circuits, software, and other components worldwide. Ranked tenth on the list of the 10 stocks Jim Simons’ quant hedge fund is buying, Analog Devices, Inc. (NASDAQ:ADI) has a market capitalization of $94.9 billion.
Jim Simons’ Renaissance Technologies currently holds over 589,196 shares of Analog Devices, Inc. (NASDAQ:ADI), amounting to over $101.4 million in worth and accounting for 0.12% of the fund’s investment portfolio. At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $5.7 billion in Analog Devices, Inc. (NASDAQ:ADI), up from 50 the preceding quarter worth $4.8 billion.
For the second quarter of 2021, Analog Devices, Inc. (NASDAQ:ADI) reported earnings per share at $1.54, beating market estimates by $0.09. The company also reported revenues of $1.66 billion, surpassing estimates by $47.46 million.
On September 9, Deutsche Bank analyst Ross Seymore raised the firm’s price target on Analog Devices, Inc. (NASDAQ:ADI) to $175 from $170 and kept a Hold rating on the shares.
In its Q4 2020 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and Analog Devices, Inc. (NASDAQ:ADI) was one of them. Here is what the fund said:
”Analog Devices benefited from several global, long-wave trends such as automation, electric vehicles and the 5G network build-out. The company’s quarterly sales into the auto, industrial and communications sectors exceeded expectations, giving the stock a lift.”
9. Airbnb, Inc. (NASDAQ:ABNB)
Simons’ Stake Value: $107.8 million
Percentage of Jim Simons’ 13F Portfolio: 0.13%
Number of Hedge Fund Holders: 58
Airbnb, Inc. (NASDAQ:ABNB) is a rental company that provides an online marketplace for lodging, catering primarily to tourists. Ranked ninth on the list of the 10 stocks Jim Simons’ quant hedge fund is buying, Airbnb, Inc. (NASDAQ:ABNB) has a market capitalization of $109.55 billion.
Jim Simons’ Renaissance Technologies currently holds over 704,157 shares of Airbnb, Inc. (NASDAQ:ABNB), amounting to over $107.8 million in worth and accounting for 0.13% of the fund’s investment portfolio. At the end of the second quarter of 2021, 58 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in Airbnb, Inc. (NASDAQ:ABNB), up from 52 hedge funds in the preceding quarter worth $2.4 billion.
On August 12, Airbnb, Inc. (NASDAQ:ABNB) issued its quarterly earnings report for the second quarter of 2021, with reported earnings per share at -$0.11, beating estimates by $0.32. Additionally, the company also reported revenues of $1.34 billion, surpassing estimates by $64.79 million.
On August 17th, Citi boosted the target price of Airbnb, Inc. (NASDAQ:ABNB) from $149 to $152 with a Neutral rating.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), Moderna, Inc. (NASDAQ:MRNA), Microsoft Corporation (NASDAQ:MSFT) and NVIDIA Corporation (NASDAQ:NVDA), Airbnb, Inc. (NASDAQ:ABNB) has a notable position in Jim Simons’ portfolio.
In the Q2 2021 investor letter of Worm Capital, the fund mentioned Airbnb, Inc. (NASDAQ:ABNB). Here is what the fund said:
“Throughout the quarter, you may have noticed that we averaged into a significant position in Airbnb (ABNB). Though the stock has been a relative underperformer since its February highs, we are highly confident about the company’s prospects and its ability to generate meaningful compounded returns over time.
Some history: We have been following Airbnb’s journey for several years, long before the company went public earlier this year. (In fact, nine years ago, in November 2012, Eric profiled the company for Inc.: “Airbnb Is Changing Travel.”)
Whenever we underwrite a new investment, we look for a few key attributes that help us determine the potential long-term value of a business, as well as its risks. In particular, we focus on management (Are they founders? Do they have skin the game? Are they playing the long game?), addressable market size (How big is the opportunity?), its relative growth and creativity to expand (Are they constantly innovating to make the product better for their customers?), margin expansion (Where can we find operating leverage in the model?), its status in the industry (Are they the dominant player? Can they
take market share from incumbents?), business risks (What are we missing? Are customers dissatisfied? What do employees say?) and probably a dozen more elements that are critical to our process. It’s only then do we take out the pencils do the valuation work.In short, ABNB fulfills pretty much every element of a business model we’re attracted to: First, it’s highly scalable marketplace-based business model that unites buyer and seller with observable flywheel effects. (This is an important observation, in that the platform creates significant economic value for millions of hosts who rely on Airbnb, which in turn attracts new hosts who identify the opportunity, which creates more inventory, which turn attracts more travelers, which attracts more hosts, and soon.) Second, it has a global focus with significant opportunities to expand its operating leverage; Third,
its management—which is still founder-led—stands out to us as long-term thinkers capable of handling crisis, which the team demonstrated throughout the pandemic by dropping operating costs and turning the business into a more efficient, lean organization. (Like Churchill said: “Never let a good crisis go to waste.”)..”
8. Accenture Plc (NYSE:ACN)
Simons’ Stake Value: $127 million
Percentage of Jim Simons’ 13F Portfolio: 0.15%
Number of Hedge Fund Holders: 52
Accenture Plc (NYSE:ACN) is a multinational company that specializes in IT services and consulting, based in Dublin, Ireland. Ranked eighth on the list of the 10 stocks Jim Simons’ quant hedge fund is buying, Accenture Plc (NYSE:ACN) has a market capitalization of $222.93 billion.
According to the recent 13F Filings, Jim Simons’ Renaissance Technologies holds 430,900 shares of Accenture Plc (NYSE:ACN), amounting to over $127 million in worth and representing 0.15% of the fund’s total portfolio value. At the end of the second quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $3.15 billion in Accenture Plc (NYSE:ACN), up from 48 hedge funds in the previous quarter with stakes worth $2.35 billion.
For the second quarter of 2021, Accenture Plc (NYSE:ACN) reported earnings per share at $2.03. beating estimates by $0.13. The company also generated revenues of $12.09 billion, surpassing the estimated revenues by $256.68 million.
On September 27, Barclays analyst Ramsey El-Assal raised the firm’s price target on Accenture Plc (NYSE:ACN) to $384 from $335 and kept an Overweight rating on the shares.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), Moderna, Inc. (NASDAQ:MRNA), Microsoft Corporation (NASDAQ:MSFT) and NVIDIA Corporation (NASDAQ:NVDA), Accenture Plc (NYSE:ACN) has a notable position in Jim Simons’ portfolio.
Fiduciary Management, in their Q1 2021 investor letter, mentioned Accenture plc (NYSE:ACN). Here is what the fund had to say:
“Even great companies can get too expensive. In early January, we sold our long-standing position in Accenture PLC after the company’s valuation exceeded 30 times next 12 months (NTM) earnings per share (EPS). We originally invested in Accenture at the launch of the FMI International strategy at a valuation below 15 times NTM EPS and held the stock for over ten years. We added to the holding numerous times in the early years, growing the position size to as high as 5.5% in late 2014, before dialing it back in recent years as the valuation became less compelling. It is one of the world’s largest information technology services firms, specializing in helping complex, global businesses navigate disruption, and focusing on next-generation services like digital, cloud, and security. For years, the investment allowed FMI to capture the inherently higher growth of technology-related industries (GDP+) without investing directly in pure “invention-oriented” technology companies. Through Accenture we were able to avoid some of the shortfalls of tech investing: technology obsolescence, short product cycles, and subpar return on invested capital (ROIC). It grew steadily, was solidly profitable, capital-light, and generated high returns, all while maintaining a rock-solid balance sheet. It compounded its business value for many years, outperforming the MSCI EAFE indices by over 450% during our holding period. Unfortunately, the market increasingly recognized the company’s positive attributes, and the stock’s discount to intrinsic value slowly evaporated. Despite our admiration for the business, it exceeded our valuation threshold. We will continue to follow the company closely for future opportunities.”
7. GameStop Corp. (NYSE:GME)
Simons’ Stake Value: $129.79 million
Percentage of Jim Simons’ 13F Portfolio: 0.16%
Number of Hedge Fund Holders: 18
GameStop Corp. (NYSE:GME) is a retail company that offers video game and consumer electronics products. Based in Texas, it is the largest video game retailer in the world. The company has a market capitalization of $14.49 billion and is ranked seventh on the list of the 10 stocks Jim Simons’ quant hedge fund is buying.
At present, Jim Simons’ Renaissance Technologies holds 606,141 shares of GameStop Corp. (NYSE:GME), amounting to over $129.79 million in worth and representing 0.16% of the fund’s total portfolio value. At the end of the second quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $247.9 million in GameStop Corp. (NYSE:GME), up from 13 hedge funds in the previous quarter with stakes worth $96.4 million.
For the second quarter of 2021, GameStop Corp. (NYSE:GME) reported earnings per share at -$0.40, missing market estimates by $0.26. The company also reported revenues of $942 million, falling short of the estimated revenues by $76.60 million.
On September 27, Ascendiant analyst Edward Woo lowered the firm’s price target on GameStop Corp. (NYSE:GME) to $24 from $25 and kept a Sell rating on the shares, noting that the stocks popularity due to Reddit will soon fade.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), Moderna, Inc. (NASDAQ:MRNA), Microsoft Corporation (NASDAQ:MSFT) and NVIDIA Corporation (NASDAQ:NVDA), GameStop Corp. (NYSE:GME) has a notable position in Jim Simons’ portfolio.
In the Q2 2021 investor letter of RF Capital Management, the fund mentioned GameStop Corp. (NYSE:GME). Here is what the fund said:
“Although the initial trading frenzy has passed, the stock price continues to remain elevated as we write this letter. We don’t profess to understand the mechanics and exact details of what drove GameStop’s historic run. However, we did trade around our position in GME as it happened and took full advantage of the price action. Because GME has been well-covered in the media, we’ll just provide a brief overview of what happened.
GameStop’s stock price started the year at $19/share. Then volume started to increase midJanuary, and the stock traded in the $30’s and $40’s. In the last week of January, the meteoric rise of GME’s stock price occurred. GME’s stock reached an all-time high of $483 before crashing back down to the $40’s. Essentially, the stock price rallied 2,442%, crashed (wiping out almost $30 billion in market cap), and rallied again.
The prevailing narrative was the battle between retail investors versus institutions and hedge funds. Retail investors were participating in forums and social media sites like WallStreetBets on Reddit and Twitter to exchange ideas. Then, they used brokers like Robinhood, TD Ameritrade, and WeBull to execute their trades. As a result, retail investors started getting involved with companies like GameStop, BlackBerry, and AMC Theatres.
Because there was heavy short interest in companies targeted by retail investors, hedge funds and institutions who were short these names started getting squeezed. Hedge funds like Melvin Capital were the first casualties of the short squeeze. Famous and prominent investors and executives such as Mark Cuban, Chamath Palihapitiya, and Elon Musk only added fuel to the fire by tweeting about and commenting on companies like GameStop.
With so much mainstream coverage of GameStop and other companies, Congress and the SEC started getting involved. Congress held hearings and investors like Keith Gill (Roaring Kitty on WallStreetBets) testified. The SEC also became more vigilant with the volatility and trading of certain stocks. For example, trading of GME was halted four times on Thursday in the last week of February, and the SEC suspended trading of fifteen companies the next day.
As of now, it is difficult to tell whether or not retail investors will continue to drive stock prices of select companies significantly in the future. However, this “phenomenon” will most likely be here to stay. Forums such as WallStreetBets have been around for as long as the internet. Unless such forums are regulated in a meaningful way, investors will continue to exchange ideas and analyze companies with one another. Furthermore, the stock market will continue to be more and more accessible to retail investors. Apps like Robinhood will continue to make it easy for individuals to trade stocks with low to zero commissions.
The public’s sentiment towards Wall Street, institutions, and our government is unlikely to change either. For many retail traders, participating in the stock market is a way to pass the time as well as a way to “get back” at institutions, hedge funds, and the government. While it is unclear if individuals are targeting hedge funds and companies with heavy short interest intentionally, retail investors will continue to make an impact on market fund flows as they become smarter and more educated about investing…” (Click here to see the full text)
6. Linde plc (NYSE:LIN)
Simons’ Stake Value: $145.7 million
Percentage of Jim Simons’ 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 55
Linde plc (NYSE:LIN) is a multinational industrial gases and chemical company based in Dublin, Ireland. Linde plc (NYSE:LIN) is the global leader in the production, processing, and distribution of industrial gas. The company has a market capitalization of $159.68 billion, and is ranked sixth on the list of the 10 stocks Jim Simons’ quant hedge fund is buying.
According to the recent 13F Filings, Jim Simons’ Renaissance Technologies holds 504,100 shares of Linde plc (NYSE:LIN), amounting to over $145.7 million in worth and accounting for 0.18% of the fund’s total investment portfolio. At the end of the second quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth over $5.9 billion in Linde plc (NYSE:LIN), up from 43 hedge funds in the previous quarter with stakes worth $4.63 billion.
On July 30, Linde plc (NYSE:LIN) issued its quarterly earnings report for the second quarter of 2021, with earnings per share at $2.70, crossing estimates by $0.17. Additionally, the company generated revenues amounting to $7.58 billion, surpassing market predictions by $202.68 million.
On September 17, Societe Generale analyst Peter Clark raised the firm’s price target on Linde plc (NYSE:LIN) to $365 from $350 and kept a Buy rating on the shares.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Ako Capital is a leading shareholder in Linde plc (NYSE:LIN) with over 4.18 million shares worth more than $1.2 billion.
Click to continue reading and see Jim Simons’ Quant Hedge Fund is Buying These 5 Stocks.
Suggested articles:
- 10 Cloud Software Stocks with Strong Growth Potential
- Seth Klarman’s Portfolio: Top 10 Stock Picks
- 10 Best Biotech Stocks To Invest In
Disclosure. None. Jim Simons’ Quant Hedge Fund is Buying These 10 Stocks is originally published on Insider Monkey.
