Jim Simons’ Quant Hedge Fund is Buying These 5 Stocks

2. Caterpillar Inc. (NYSE:CAT)

Simons’ Stake Value: $226.9 million

Percentage of Jim Simons’ 13F Portfolio: 0.28%

Number of Hedge Fund Holders: 62

Caterpillar Inc. (NYSE:CAT), is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Ranked second on our list of the 10 stocks Jim Simons’ quant hedge fund is buying, Caterpillar Inc. (NYSE:CAT) has a market capitalization of $109.49 billion.

Jim Simons’ Renaissance Technologies currently holds more than 1.04 million shares of Caterpillar Inc. (NYSE:CAT), amounting to over $226.9 million and accounting for 0.28% of the fund’s total investment portfolio. By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in Caterpillar Inc. (NYSE: CAT) worth roughly $5.3 billion. This is compared to 53 hedge funds in the previous quarter with a total stake value of approximately $5 billion.

In the second quarter of 2021, Caterpillar Inc. (NYSE:CAT) had an earnings per share of $2.60, beating estimates by $0.19. The company’s revenue was $12.89 billion, up 28.93% on a year-over-year basis and beating estimates by $360.55 million.

In the Q2 2021 investor letter of Oakmark Funds, the fund mentioned Caterpillar Inc. (NYSE:CAT). Here is what the fund said:

“Having followed the company closely for north of a decade, Caterpillar is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”