Several weeks after the end of each quarter, hedge funds such as Renaissance Technologies- whose success since inception has made founder Jim Simons a multi-billionaire- file 13Fs with the SEC. We track these filings and process them in our database, using the results to help us develop investment strategies; for example, we have found that the most popular small cap stocks among hedge funds generate an average excess return of18 percentage points per year (learn more about our small cap strategy). We also like to screen managers’ top picks for stocks satisfying the traditional value criteria of low earnings multiples. Read on for our quick take on Renaissance’s five largest holdings as of the end of March in stocks with both trailing and forward P/Es of 14 or lower or see the fund’s stock picks over time.
The fund was a heavy buyer of International Business Machines Corp. (NYSE:IBM) during the first quarter of 2013 and reported a position of 2.3 million shares in the filing. Even as the company achieves some success in its shift away from hardware and towards software and services, both sales and net income saw slight declines last quarter compared to Q1 2012. While the trailing P/E of 14 is low, even at that level we’d generally like to see an upward trend in earnings. Fisher Asset Management, managed by billionaire Ken Fisher, had 3.1 million shares of International Business Machines Corp. (NYSE:IBM) in its portfolio according to the asset manager’s own 13F (find Fisher’s favorite stocks).
The investment team cut their stake in Intel Corporation (NASDAQ:INTC) by 14% but still owned close to 17 million shares at the beginning of April. Intel Corporation (NASDAQ:INTC) trades at 12 times trailing earnings, with Wall Street analysts projecting essentially no change in earnings per share between the trailing numbers and 2014. It’s possible that this is a bit optimistic, however, as recent financials show declines on both top and bottom lines. We’d note that the dividend yield here is 3.7%. Intel Corporation (NASDAQ:INTC) was one of the largest holdings in billionaire Michael Price’s MFP Investors’ portfolio (research more stocks Price likes).