Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Jim Simons’ Latest Strategy is ‘Out With the New, In With the Old’

Renaissance Technologies has had one of the most successful histories of any hedge fund tracked by Insider Monkey. Because of the fund’s success and its very high fees, founder Jim Simons has built a multi-billion dollar fortune. Here are three trends we noticed in Renaissance’s recent activity:

Out with the new, in with the old. The first thing that stands out about Simons’ latest 13F filing, which reveals positions the billionaire held at the end of the third quarter, is his decision close out his positions in Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Broadcom (NASDAQ:BRCM). Apple and Broadcom, which supplies chips for the iPad and iPhone, have seen their share prices underperform in 2013. Microsoft, on the other hand, has not; it’s stock is up more than 40% year-to-date.


Judging by his moves out of these stalwarts, and into older-school names like General Electric (NYSE:GE) and Exxon Mobil (NYSE:XOM), it’s quite possible he’s not as excited about the tech sector as he once was. Remember, Simons is a man who had Apple and Microsoft as the top two stocks in his equity portfolio as recent as the second quarter of 2012, so it’s not like he’s always felt this way. Exxon, GE and Disney, for that matter, all issue fairly attractive dividends and aren’t overly expensive.

McDonald’s, supersized. McDonald’s (NYSE:MCD), meanwhile, was Renaissance Technologies’ No. 1 stock pick at the end of Q2 and it is again at the end of Q3. Simons actually upped his stake in the quick service restaurant behemoth by 17% last quarter and now holds more than $700 million worth of its stock. Shares of Mickey D’s have been stagnant over the past six months, but they still pay a dividend yield of 3.3% at a reasonable payout ratio, and offer mildly exciting growth prospects.

One major risk to McDonald’s is the emergence of fast casual dining options in the American and overseas markets. Chains like Chipotle and Five Guys offer consumers a similar eating environment with food that’s of a slightly higher quality, and in some cases, comparable in price to higher-end dishes available at traditional fast food restaurants.

On the plus side, and this is something that Simons is likely bullish on, McDonald’s is very well positioned to combat these competitors, particularly with its line McCafe drinks, ‘Mighty’ buffalo wings, premium salad line, and its expansive line of premium chicken sandwiches. The company beat Wall Street’s earnings estimates last quarter after missing them in Q2, so we’ll be watching Q4 data very closely.

This may make him a biotech bear. Lastly, a noticeable trend in Simons’ latest filing is possible bearishness on two fairly major biotech names: Celgene (NASDAQ:CELG) and Biogen (NASDAQ:BIIB). Now, there are many reasons why a hedge fund manager would choose to sell shares of his or her stock, and Simons’ sales in Celgene and Biogen didn’t close out his positions entirely, but they’re curious nonetheless. He cut his stake in Celgene, an immune-inflammatory biotech giant, by 25%, and he cut his holdings of neurodegenerative/autoimmune biotech Biogen by 37%. Both stocks have returned at least 60% year-to-date, so profit-taking is a reasonable explanation for the moves.

Disclosure: none

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!