Renaissance Technologies LLC Bought International Business Machines Corp. (IBM), Sold QUALCOMM, Inc. (QCOM) During The First Quarter

Drug manufacturers. According to the 13F, Renaissance Technologies LLC’s two largest holdings by market value were drug manufacturers: it owned about 11 million shares of Eli Lilly (NYSE:LLY) and about 14 million shares of Bristol-Myers Squibb (NYSE:BMY). Each of these positions was increased somewhat from three months earlier as well. Both of these stocks are priced a bit high for a value investor, with forward price-to-earnings multiples of about 20. However- as is common for pharmaceutical stocks- their performance is mostly independent of macro factors (Eli Lilly’s beta is 0.4, while Bristol-Myers Squibb’s is 0.1) and they pay dividend yields of about 3.5%. Given their sizable market capitalizations (over $60 billion in each case) they may be of interest for investors looking for defensive opportunities or low-risk yields. We would be careful when looking at Bristol-Myers Squibb, however, as that company’s most recent financial results showed steep declines in both sales and net income from their levels in the first quarter of 2012.

Of course, a number of other large-cap stocks in the healthcare sector offer comparable dividend yields and betas, so income or defensive investors would be advised to review other opportunities rather than blindly following Renaissance Technologies LLC. As for the other two moves we’ve covered here, we’re not sure we agree with the investment team’s line of thinking; certainly, QUALCOMM, Inc. (NASDAQ:QCOM) could easily prove undervalued if it was able to sustain double-digit growth rates on the bottom line for the next several years and given the more moderate expectations currently priced into the stock we think that it is worthy of further research.

Disclosure: I own no shares of any stocks mentioned in this article.