Apple Inc (AAPL), Intel, and Lorillard – Billionaire Jim Simon’s Long-Term Holdings

Apple Inc (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC) and Lorillard Inc (NYSE:LO) are billionaire Jim Simon’s top 3 long-term holdings. With over $33 billion in assets under management, Jim Simons’ Renaissance Technologies is one of the largest hedge fund management companies in the world.  Within Simons’ brainchild exists three distinct funds: the Nova Fund, the Renaissance Institutional Equities Fund, and the Medallion Fund.  Since 1989, the Medallion Fund, which utilizes high frequency trading tactics to exploit market inefficiencies, has generated an annual return of nearly 35% after fees.

RENAISSANCE TECHNOLOGIES

Considering the fact that the fund charges hefty fixed (5%) and performance (44%) fees, it’s easy to see why Simons is so revered in investing circles.  While many reports on Simons’ holdings take a short-term outlook, it’s also worth determining which stocks have been long-term darlings of the iconic money manager. Without further ado, here are Jim Simons’ top three stock picks for the long haul; each position has maintained a value of at least $100 million in Renaissance Technologies since the end of 2010.

Apple, Inc. (NASDAQ:AAPL)

According to his 13F filings with the SEC, Simons’ top stock pick in five of the past seven quarters has been Apple.  Since December 31st, 2010, the manager’s average position in the tech giant has been $429.3 million, good for 1.6% of Renaissance’s total holdings over this time period.  Remarkably, Simons’ shares of Apple, Inc. (NASDAQ:AAPL) have generated a return of 101.9% over the past 425 trading days, which is far more impressive than tech industry peers like Google (NASDAQ:GOOG) at 15.7%, and Microsoft (NASDAQ:MSFT) at 12.0%.

Apple, Inc. (NASDAQ:AAPL) has seen its revenues (128.2%), earnings (179.4%), and free cash flow (152.9%) grow by triple-digits over this time period, again outpacing its closest competitors. With a bargain basement Price-to-Earnings multiple (15.9X) below GOOG (20.1X) and its own 5-year historical average (21.9X), it’s easy to see that there’s still some value here.  Throw in the fact that forward-looking estimates are forecasting EPS to hit $52.77 by the end of 2013, and fairly valued shares can eclipse $1,000 over the next 12 to 16 months.

Lorillard Inc. (NYSE:LO)

Lorillard is the third largest cigarette manufacturer in the United States, and its Newport brand of menthols are smoked by an estimated 14% of the country’s overall smoking population. Beginning at the end of 2010, Jim Simons has held an average of $277.3 million worth of LO in each quarter since, amounting to 1.1% of his total portfolio holdings over this time.  In the seven quarters since the start of this period, Lorillard has fallen out of Simons’ top ten just one, in the first quarter of 2012. In a little more than twenty months, shares of LO have generated Renaissance a total return of 51.5%, good for an annualized return of 30.9%.

Despite these gains, Lorillard still trades at a P/E ratio (15.2X) that is below the tobacco industry’s norm (17.1X), even though it has exhibited above-average EPS expansion post-recession.  Now, when this growth is factored into the equation, we can see that LO sports a PEG ratio of 1.1, below competitors like Imperial Tobacco Group (OTC:ITYBY) at 2.6, Altria Group (NYSE:MO) at 4.4, and Reynolds American (NYSE:RAI) at 4.9.  With double-digit EPS growth forecasted over the next two years, it appears that the markets are under-appreciating Lorillard’s earnings potential.

Intel Corporation (NASDAQ:INTC)

Comprising an average value of $248.5 million in Renaissance’s past seven quarters of 13F filings, Intel has been a splendid investment for the fund, returning 20.3% since the end of 2010.  On an annual basis, this return amounts to little over 12.0% with a beta of around 1.0.  From a valuation standpoint, INTC is currently trading at a 26.3% discount in relation to its own 5-year historical price multiples, and annual earnings growth is expected to average 10.7% over the next half-decade.  If the company can hit the Street’s year-ahead EPS forecast of $2.52, fairly valued shares of INTC can eclipse $40 by next Christmas; they currently trade in the $25 range.

To recap: each of these three stocks -Apple, Inc. (NASDAQ:AAPL), Lorillard Inc (NYSE:LO), and Intel Corp (NASDAQ:INTC)- exhibits the attractive combination of cheap valuation metrics and above-average earnings growth.  If one had invested $10,000 between each of these stocks equally, they would have made a profit of a little under $5,800 in 20 month’s time. For a longer look at Jim Simons’ favorite stock holdings, check out his fund’s profile on Insider Monkey by clicking here.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!