Microsoft Corporation (MSFT), Intel Corporation (INTC) Among This Mega-Hedge Fund’s Top Picks

RENAISSANCE TECHNOLOGIESEarlier this month billionaire Jim Simons and his firm Renaissance Technologies filed its third quarter 13F, where notable investors and hedge funds are required to disclose their quarterly public equity holdings to the SEC. Jim Simons founded Renaissance Technologies in 1982 and now has over $15 billion of AUM. Simons retired in early 2010, but still has some capital invested in the fund. By analyzing Renaissance’s recent 13F we have identified the fund’s top holdings as of the end of 3Q. Check out all of RenTech’s top picks.

Microsoft Corporation (NASDAQ:MSFT) was Renaissance’s top pick in 3Q with over 1.4% of the fund’s 13F invested in the tech giant. Revenues are expected to rise 9% in 2013 and then 7% in 2014 on the back of Windows Live revenues being up 18% in 2013. The diverse tech company has recently launched new products that include Windows 8 and the Surface tablet, which should drive interim growth. This tech company appears to be offering a very good dividend (3.4% yield) and growth on a cheap basis – Microsoft’s trailing P/E comes in at 15x, but its forward ratio of only 8x suggest investors. Microsoft is also a top tech stock owned by hedge funds in 3Q (see our full top 10 here).

Eli Lilly & Co. (NYSE:LLY) saw Renaissance  dumping 18% of its shares during 3Q, but Eli remained the fund’s second largest 13F holding. Trading at 13x earnings, Eli is on the very low end of this range, compared to Pfizer and Merck, both trading at 20x earnings. On the surface, Eli looks like a cheap investment, but its five-year expected EPS, which is expected to decline 4% annually, causes some concern. Eli plans to grow sales by entering emerging markets and Japan, but we remain cautious and believe better value can be found in other pharma companies such as Bristol Myers. Eli Lilly is one of billionaire Stanley Druckenmiller’s top dividend picks (see all of his picks here).

Intel Corporation (NASDAQ:INTC) was a 10% share increase from 2Q for Renaissance. The chip maker continues to pay one of the largest dividends in the space with a 4.6% yield. Softness in PC sales has pressured the company of late, with sales expected to be down 1% by year’s end. The stock’s recent pull back has put Intel in an attractive valuation range, trading at a mere 8.5x earnings and a PEG ratio of 0.8. Intel expects to counter a slowing of PC sales with data center growth; we don’t see a value trap here, only a value play.

Bristol Myers Squibb Co. (NYSE:BMY) was Renaissance’s fourth spot in its 13F for 3Q. Another one of Renaissance’s pharma picks, we believe that Bristol has better prospects when compared to Eli. Bristol pays a dividend yielding over 4%, but does trade at 30x – the upper end of the pharma industry. On a forward earnings basis, Bristol is much more in line with its peers at 18x. Driving Bristol’s future growth and market share gains will be the recent acquisition of Amylin Pharmaceuticals. We see the pharma’s dividend and over discounted future earnings as a reason for investors to take a closer look at the stock.

Phillip Morris International Inc. (NYSE:PM) comprises nearly $320 million worth of RenTech’s capital, and pays a rather strong dividend at 3.8%. This non-US, international only, tobacco company trades in line with its major competitors at 19x trailing earnings, but its forward P/E of 15x makes it an attractive buy. Growing health concerns and higher taxes on the company’s products are headwinds for Philip Morris, but a three year cost reduction program should help mitigate revenue loss with margin expansion. Phillip also has the opportunity to grow in markets that it has little exposure to, including China and India.

We believe Microsoft may finally be breaking out of its trading shell and is poised for share appreciation given its robust product offering. The tech giant also pays a healthy dividend for those who decide to wait and see how its new OS and tablet impact earnings. We prefer the dividend that Bristol and Intel pay relative to the other dividend-payer Eli, but also like Phillip Morris’ potential.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!