Renaissance Technologies LLC (RenTech) is a New York-based hedge fund that Jim Simons founded in 1982. RenTech, and especially its Medallion Fund, has been among the most successful funds in the field, and most of its success can be attributed to Simons’ math and code breaking skills. Between 1994 and mid-2014, Medallion averaged 71.8% annual returns. As of October 2015, Renaissance Technologies had roughly $65 billion in assets under management. The firm uses only quantitative investment approaches based on mathematical and statistical analysis. According to its most recent 13F filing, the firm’s highly diversified equity portfolio was worth more than $45.89 billion as of the end of the fourth quarter of 2015.
We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).
Colgate-Palmolive Company (NYSE:CL)
– Shares Owned by Renaissance Technologies as of December 31: 10.06 Million
– Value of Holding as of December 31: $670.39 Million
At the end of the third quarter, Colgate-Palmolive Company (NYSE:CL) was RenTech’s top pick. However, over the fourth quarter, the fund trimmed its exposure by 12%, and the stake fell to the second spot in the list, trailing Novo Nordisk A/S (ADR) (NYSE:NVO). A few weeks ago, Colgate-Palmolive Company (NYSE:CL) reported its fourth-quarter financial results, which included earnings of $0.73 per share, $0.01 above the consensus estimate, on revenue of $3.90 billion, slightly below the Street’s expectations of $3.95 billion. Also reducing its stake in the company, but retaining a large position, was Donald Yacktman’s Yacktman Asset Management, which disclosed ownership of 1.34 million shares, after trimming its exposure by 8% during the fourth quarter.
Apple Inc. (NASDAQ:AAPL)
– Shares Owned by Renaissance Technologies as of December 31: 4.46 Million
– Value of Holding as of December 31: $469.8 Million
Apple Inc. (NASDAQ:AAPL) was the largest new position initiated by Renaissance Technologies between October and December and the stake, which accounts for slightly more than 1% of the fund’s equity portfolio, is the third largest in terms of value. Also quite bullish on the tech giant is Ken Fisher’s Fisher Asset Management, which inched up its stake in Apple by roughly 1% during the fourth quarter to 11.27 million shares. Constantly in the spotlight, Apple Inc. (NASDAQ:AAPL)’s stock has lost 26.1% over the last year, as investors became concerned about the company’s iPhone sales, especially in China, which is one of Apple’s key markets. Nevertheless with a dividend yield of 2.22% and trading at 9.2 times forward earnings, Apple represents one of the best bets in the tech sector, and Renaissance’s new stake confirms this statement.
On the next page we will take a look into Simons’ moves in Pfizer, Palo Alto Networks and Gilead Sciences.