We recently published a list of Renaissance Technologies Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) stands against other Renaissance Technologies portfolio’s top stock picks.
The American quant hedge fund Renaissance Technologies is known for using statistical and mathematical tools to drive its investment programs. It was founded in 1982 by Jim Simons, a mathematician who worked as a code breaker for the US National Security Agency during the Cold War. As of December 31, Renaissance Technologies had a portfolio valued at over $67.5 billion.
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Simons was among the pioneers of quantitative investing. He had an estimated net worth of $31.4 billion at the time of his death in May last year, making him the 51st richest person in the world at the time. His use of mathematical models and algorithms to drive long-term investment returns earned him a legacy that rivaled the likes of Warren Buffett and George Soros.
The Renaissance founder stepped down from active hedge fund management in 2010 and resigned as its executive chairman in 2021. The firm is now headed by Peter Brown, who has a strong educational background in mathematics and computer sciences. His father, Henry B.R. Brown invented the Reserve Primary Fund in 1970, the first money market fund to be established.
Brown is committed to using mathematical models to discover and unlock the value of stocks in the market. 2024 was a strong year for Renaissance Technologies. According to a report on Business Insider, the two funds that are open to investors—Renaissance Institutional Equities Fund (RIEF) and Renaissance Institutional Diversified Alpha (RIDA)—delivered double-digit returns of 22.7% and 15.6%, respectively.
Its signature Medallion fund performed even better, with a 30% gain, outperforming the broader market by nearly seven percentage points. Medallion was closed to outside investors in 1993 and has since then only been available to past and current employees, and their families. The fund generated average annual returns of 66% for three decades between 1988 and 2018, resulting in over $100 billion in profits during the period. This earned Medallion the reputation of being one of the most successful investment portfolios of all time.
On February 13, Renaissance Technologies filed a portfolio update, reflecting its holdings for the fourth quarter of 2024. The 13F SEC filings revealed significant changes in the portfolio, including a substantial reduction of stake in a leading technology conglomerate and increased investments in Asia-based artificial intelligence companies during the quarter.
Our Methodology:
We scanned Renaissance Technologies’ 13F portfolio, as of December 31, 2024. From there, we picked the top 10 stocks according to their stake value and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
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Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Stake Value as of Q4 2024: $562,656,064
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is an American biotechnology company that uses scientific innovation to develop transformative medicines for patients with serious diseases. It is one of the top stock picks from the Renaissance Technologies portfolio.
In January, the company received FDA approval for JOURNAVX, a medication to treat adults with moderate-to-severe acute pain. This can be a major catalyst of growth for Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) as it can open new opportunities to build solid business beyond cystic fibrosis (CF) treatments. The non-opioid oral pain signal inhibitor can be a valuable addition to the healthcare industry, offering patients an alternative to highly addictive opioids, as over 80,000 people die each year due to overdoses involving opioids.
Analysts see immense potential in JOURNAVX to become a blockbuster drug with peak annual revenues of approximately $5 billion over the next five to six years. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) also has several other treatments in its pipeline, including those aimed at treating diabetes, complex kidney diseases, and other conditions, which positions it well for profitable growth over the long run.
During its Q4 2024 earnings call on February 10, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) reported a 12% increase in its full-year product revenue to $11.02 billion. The company is anticipating continued growth in fiscal 2025 with the approval of JOURNAVX, the launch of its fifth CF medicine, ALYFTREK, and the continuing global acceptance of CASGEVY, a therapy used to treat patients with beta-thalassemia and sickle cell disease.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s share price has surged by 17% year-to-date, with Wall Street analysts projecting a further 7% uptick, on average, in its trading value. According to Insider Monkey’s database for Q4 2024, 68 hedge funds held stakes in the company, up from 55 at the end of the third quarter.
Overall, VRTX ranks 7th on our list of Renaissance Technologies portfolio’s top stock picks. While we acknowledge the potential of software companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VRTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.