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 Click to see monthly returns in table format!

Lists

5 Best States for Golf Adventures

Top 15 Places To Visit Before You Die

10 Most Expensive Smartphones in the World

10 States with Lowest Physician Density

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

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!