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.

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!