In this article, we discuss 10 blue chip stocks to buy according to billionaire Jim Simons.
Jim Simons is a leading mathematician and investor who this year appeared on the Forbes list of U.S. billionaires, ranking 48th, with a net worth of $29 billion. He is the founder of Renaissance Technologies, a Setauket, New York-based hedge fund that manages. Its signature Medallion fund has delivered average annual returns of about 40% since 1988 and has paid him about $12 billion in cash distributions since 2006.
The investing approach of Simons is predicated on finding and identifying patterns in the market, i.e., moves that repeat over time and become predictable. Once they have been found, their level of dependability is evaluated through backtesting techniques. In 1978, Simons established the hedge fund Monemetrics, which enabled him to discover that pattern recognition could be applied to trade on the financial markets, and he subsequently included quantitative analysis into his investing strategy. He is hence known as the “Quant King”.
Jim Simmons’s hedge fund Renaissance Technologies manages 18 clients and has a portfolio value of $84.4 billion as of Q2. The fund has a top 10 holdings concentration of 10.97%. Renaissance Technologies’ biggest holding is Novo Nordisk A/S (NYSE:NVO), with 17,529,671 shares held.
Investors in the United States were taken off guard as a hotter-than-expected inflation number wiped more than $1.5 trillion off the S&P 500 on Tuesday, virtually erasing a four-day rise. Across the board, selling drove the S&P 500 down more than 4.3% to its worst day since June 2020, while the tech-heavy Nasdaq 100 losses reached 5%, with the major mega-cap technology stocks taking the most damage.
While the magnitude of Tuesday’s drop was significant, the S&P 500 only reversed gains made in the previous four sessions that had been fueled by expectations of a softer reading on the U.S. consumer price index.
Tuesday’s selling was most intense in speculative market segments that are most susceptible to rising interest rates. This category includes technology since stock values are dependent on anticipated future earnings, which are discounted as interest rates rise. On Tuesday, every single stock on the Nasdaq 100 was in the red.
Given the market volatility and the potential for more Fed interest rate raises, stocks could fall even further if economic data doesn’t meet expectations. Nevertheless, the lower prices provide an opportunity for long-term investors to buy blue chip companies at potentially attractive valuations.
Jim Simons of Renaissance Technologies
Our Methodology
For our list of 10 Blue Chip Stocks to Buy According to Billionaire Jim Simons, we took 10 companies from Jim Simons’ Renaissance Technologies’ 13F portfolio at the end of Q2 2022 that had a mixture of growth potential, sector leadership, and defensive qualities. We then ranked them from #10 to #1. We also included the number of hedge funds in our database that held shares in the same stock in Q2.
10 Blue Chip Stocks To Buy According To Billionaire Jim Simons
10. American Express Company (NYSE:AXP)
Renaissance Technologies Stake Value: $372 million
Percentage of Renaissance Technologies’ Portfolio: 0.44%
Number of Hedge Fund Holders: 67
American Express Company (NYSE:AXP) is a multinational financial company operating in around 130 countries that provides charge and credit card payment solutions to individuals and companies. Additionally, the corporation owns an extremely lucrative merchant payment network.
The financial company is a blue chip that has not seen much weakness in terms of the American consumer. American Express CFO Jeffrey Campbell when asked while speaking at the Barclays Global Financial Services Conference about consumer spending having increased through Q2 and whether that momentum has held up so far in Q3, replied:
“Well, so the short answer is yes. And in fact, I said a few minutes ago that our confidence level in the multiyear growth plan we laid out back in January really higher than it was back in January. And so if you think about all of the trends that we talked about in sort of excruciating detail back on the July earnings call, they really all continued. So goods and services spending continues to look very strong. The U.S. consumer continues to look very strong..”
At the end of Q2 2022, 67 hedge funds tracked by Insider Monkey owned stakes in American Express Company (NYSE:AXP). Berkshire Hathaway was the stock’s leading stakeholder in Q2, owning American Express Company (NYSE:AXP) shares worth over $21 billion.
Like Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT), American Express Company (NYSE:AXP) is one of the blue chip holdings of billionaire Jim Simon’s Renaissance Technologies in Q2.
9. Colgate-Palmolive Company (NYSE:CL)
Renaissance Technologies Stake Value: $390 million
Percentage of Renaissance Technologies’ Portfolio: 0.46%
Number of Hedge Fund Holders: 55
Since its establishment in 1806, Colgate-Palmolive Company (NYSE:CL) has developed into a global leader in consumer products. In addition to its oral care line, the company also develops shampoos, shower gels, deodorants, and home care items that are distributed in over 200 countries. International sales account for approximately 70% of the company’s consolidated revenue.
Colgate-Palmolive Company (NYSE:CL) performed well in Q2 2022 and reported revenue of $4.48 billion, up 5.26% YoY. The company posted a normalized EPS of $0.72, beating the market consensus estimates by $0.01.
At the end of Q2 2022, 55 hedge funds tracked by Insider Monkey owned stakes in Colgate-Palmolive Company (NYSE:CL). First Eagle Investment Management was the stock’s leading stakeholder in Q2, owning Colgate-Palmolive Company (NYSE:CL) shares worth over $899 million.
8. JPMorgan Chase & Co. (NYSE:JPM)
Renaissance Technologies Stake Value: $442 million
Percentage of Renaissance Technologies’ Portfolio: 0.52%
Number of Hedge Fund Holders: 104
With approximately $4 trillion in assets, JPMorgan Chase & Co. (NYSE:JPM) is one of the largest and most sophisticated financial organizations in the United States. Consumer and community banking, corporate and investment banking, commercial banking, and asset and wealth management are its four key segments. Given the bank’s scale, JPMorgan Chase & Co. (NYSE:JPM) is one of the leading blue chips in the financial sector.
Matt O’Connor from Deutsche Bank lowered the price target on JPMorgan Chase & Co. (NYSE:JPM) shares to $155 from $174 while keeping a buy rating on the stock. O’Connor informed investors in a research note that the banks have underperformed this year mostly due to worries of a recession. Since January’s high, bank stocks have declined by around 25%, and the probability of a moderate-to-severe recession is currently priced in at between 55% and 60%.
At the end of Q2 2022, 104 hedge funds tracked by Insider Monkey owned stakes in JPMorgan Chase & Co. (NYSE:JPM). Fisher Asset Management was the stock’s leading stakeholder in Q2, owning JPMorgan Chase & Co. (NYSE:JPM) shares worth over $899 million.
7. PepsiCo, Inc. (NASDAQ:PEP)
Renaissance Technologies Stake Value: $454 million
Percentage of Renaissance Technologies’ Portfolio: 0.53%
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NASDAQ:PEP) is one of the world’s major beverage and food corporations. It manufactures, promotes, and sells several beverages and food brands, such as Pepsi, Mountain Dew, Gatorade, Doritos, Lays, and Ruffles.
Recently, PepsiCo, Inc. (NASDAQ:PEP) announced that it has entered into a strategic partnership with Aqua Carpatica, a Romanian spring water company, whereby PepsiCo, Inc. (NASDAQ:PEP) would possess a 20% share in Aqua Carpatica. PepsiCo will have the right to distribute the spring water in Romania and Poland, with the potential to extend to additional countries, including the United States, under the terms of the deal.
ClearBridge Investments mentioned PepsiCo, Inc. (NASDAQ:PEP) in its second-quarter 2022 investor letter. Here is what the firm had to say:
“Also in the stable and predictable cash flow camp, though with a very different business model, global food and beverage company PepsiCo (PEP) reported very strong organic growth in the first quarter, driven by healthy price/mix, and raised revenue guidance, while holding EPS guidance. Notably, its beverage business showed expanding margins.”
At the end of Q2 2022, 65 hedge funds tracked by Insider Monkey owned stakes in PepsiCo, Inc. (NASDAQ:PEP). Fundsmith LLP was the stock’s leading stakeholder in Q2, owning PepsiCo, Inc. (NASDAQ:PEP) shares worth over $1.1 billion.
6. The Home Depot, Inc. (NYSE:HD)
Renaissance Technologies Stake Value: $480 million
Percentage of Renaissance Technologies’ Portfolio: 0.56%
Number of Hedge Fund Holders: 80
The Home Depot, Inc. (NYSE:HD) is the biggest home improvement specialty retailer in the world, operating over 2,300 warehouse-format shops and providing over 30,000 goods in-store and 1 million products online in the United States, Canada, and Mexico. Its stores include a wide selection of construction supplies, home improvement products, lawn and garden products, and home décor items, as well as a variety of services, including home improvement installation services and tool and equipment rentals.
Analyst Scot Ciccarelli increased his price target on The Home Depot, Inc. (NYSE:HD) from $375 to $399 and maintained a buy rating on the stock. Despite macroeconomic concerns, the company’s Q2 earnings were solid, and its business trends remain good, the analyst wrote in a research note for investors.
At the end of Q2 2022, 80 hedge funds tracked by Insider Monkey owned stakes in The Home Depot, Inc. (NYSE:HD). Fisher Asset Management was the stock’s leading stakeholder in Q2, owning The Home Depot, Inc. (NYSE:HD) shares worth over $2.2 billion. Renaissance Technologies owned $480 million, ranking it #6 on our list of 10 Blue Chip Stocks to Buy According to Billionaire Jim Simons.
Alongside The Home Depot, Inc. (NYSE:HD), Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT) are blue chip holdings of billionaire Jim Simons’ Renaissance Technologies at the end of Q2.
5. Berkshire Hathaway Inc. (NYSE:BRK-B)
Renaissance Technologies Stake Value: $488 million
Percentage of Renaissance Technologies’ Portfolio: 0.57%
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-B) is a holding corporation whose subsidiaries engage in a variety of businesses. Insurance is the company’s core business division, which is principally managed by Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group.
Barron’s recently reported that it is a good time to buy Berkshire Hathaway Inc. (NYSE:BRK-B) as the company has never been in better shape. Its stock looks appealing after pulling back more than 15% from its record high in March. The conglomerate’s operating profits were up 22% in the second quarter, excluding foreign-exchange gains, powered by a 56% gain in investment income. Berkshire’s annual operating income is running at more than $30 billion after taxes, the author notes.
Investment management company Diamond Hill Capital mentioned Berkshire Hathaway Inc. (NYSE:BRK-B) in its “Diamond Hill Large Cap Fund” first-quarter 2022 investor letter. Here is what the firm had to say:
“Diversified holding company Berkshire Hathaway reported strong earnings during the quarter and benefited from continued share repurchases below intrinsic value. The company also announced significant deployments of excess cash during the quarter, including the acquisition of Alleghany and a large increase in its stake in Occidental Petroleum.”
At the end of Q2 2022, 109 hedge funds tracked by Insider Monkey owned Berkshire Hathaway Inc. (NYSE:BRK-B). Bill & Melinda Gates Foundation Trust was the stock’s leading stakeholder in Q2, owning Berkshire Hathaway Inc. (NYSE:BRK-B) shares worth over $9.4 billion.
4. The Hershey Company (NYSE:HSY)
Renaissance Technologies Stake Value: $789 million
Percentage of Renaissance Technologies’ Portfolio: 0.93%
Number of Hedge Fund Holders: 43
The Hershey Company (NYSE:HSY) is the top U.S. confectionery maker and controls around 46% of the domestic chocolate market. Over the past 85 years, the company’s product line has evolved to include 100 brands, including Reese’s, Kit Kat, Kisses, and Ice Breakers. Hershey’s goods are offered in around 80 countries, although only a high-single-digit percentage of sales come from international markets, such as Brazil, India, and Mexico.
Recently, Cowen analyst Brian Holland initiated coverage of The Hershey Company (NYSE:HSY) with a Market Perform rating and $238 price objective. The analyst believes that the market has adequately valued the company’s “excellent execution, successful diversification, best-in-class margins, pricing power, and reduced relative overseas exposure.” In addition, Holland’s brand reinvestment “should keep margins under control,” the analyst informed investors in a research report.
At the end of Q2 2022, 43 hedge funds tracked by Insider Monkey owned The Hershey Company (NYSE:HSY). Renaissance Technologies was the stock’s leading stakeholder in Q2, owning The Hershey Company (NYSE:HSY) shares worth over $789 million.
3. Apple Inc. (NASDAQ:AAPL)
Renaissance Technologies Stake Value: $844 million
Percentage of Renaissance Technologies’ Portfolio: 1%
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) creates, manufactures, and distributes smartphones, personal computers, tablets, wearables, and accessories, in addition to selling a variety of accessories. Additionally, the business provides payment, digital content, cloud, and advertising services.
Wamsi Mohan, an analyst at Bank of America, reported that his monitoring of iPhone ship dates on Apple’s website and several carrier websites reveals that, as of September 12, release dates for the iPhone 14 Pro and Pro Max models are extended compared to this time last year. The analyst noted that the extended lead times are “especially impressive” given that Apple has boosted iPhone prices in several markets to mitigate the impact of the stronger U.S. dollar. The analyst regards the early pre-order data as encouraging for Apple Inc. (NASDAQ:AAPL) and maintains a buy rating and $185 price target on the stock.
Here is what Wedgewood Partners had to say about Apple Inc. (NASDAQ:AAPL) in its second-quarter 2022 investor letter:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”
At the end of Q2 2022, 128 hedge funds tracked by Insider Monkey owned Apple Inc. (NASDAQ:AAPL). Berkshire Hathaway was the stock’s leading stakeholder in Q2, owning Apple Inc. (NASDAQ:AAPL) shares worth over $122 billion.
2. Meta Platforms, Inc. (NASDAQ:META)
Renaissance Technologies Stake Value: $884 million
Percentage of Renaissance Technologies’ Portfolio: 1.04%
Number of Hedge Fund Holders: 184
With 2.5 billion monthly active members, Meta Platforms, Inc. (NASDAQ:META) is the largest social network online. The company’s ecosystem primarily comprises of the Facebook app, Instagram, Messenger, and WhatsApp, as well as several services around these products.
Meta Platforms, Inc. (NASDAQ:META) reported revenue of $28.82 billion, recording a decline of 0.88% YoY and posted a normalized EPS of $2.46, missing consensus estimates by $0.09. The CEO of Meta Platforms, Inc. (NASDAQ:META), Mark Zuckerberg, while speaking to investors on the second quarter results, commented:
“In this environment, we’re focused on making the long-term investments that will position us to be stronger coming out of this downturn, including our work on our discovery engine and Reels, our new ads infrastructure and the metaverse. And we’re also focused on being rigorous about measuring returns and sizing these investments correctly.”
At the end of Q2 2022, 184 hedge funds tracked by Insider Monkey owned Meta Platforms, Inc. (NASDAQ:META). Fisher Asset Management was the stock’s leading stakeholder in Q2, owning Meta Platforms, Inc. (NASDAQ:META) shares worth over $1.8 billion.
1. Microsoft Corporation (NASDAQ:MSFT)
Renaissance Technologies Stake Value: $981 million
Percentage of Renaissance Technologies’ Portfolio: 1.16%
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) produces and licences software for consumers and businesses. Microsoft is widely recognized for its Windows operating systems and Office productivity suite. The business is divided into three major divisions of similar size: productivity and business processes, intelligence cloud, and more personal computing.
Given its dominance of PC operating systems and its growth potential in the cloud, Microsoft Corporation (NASDAQ:MSFT) is regarded as one of the leading tech blue chips. Given Renaissance Technologies’ holding of almost $1 billion in the stock, it is also number one on our list of 5 and 10 Blue Chip Stocks to Buy According to Billionaire Jim Simons.
The Verge’s Tom Warren reported that Microsoft Corporation (NASDAQ:MSFT) has begun testing new updates to the Xbox Home U.I. that will be released to the public in 2023. The revisions to the layout and style will make it easier to locate Xbox games and applications.
At the end of Q2 2022, 258 hedge funds tracked by Insider Monkey owned Microsoft Corporation (NASDAQ:MSFT). Fisher Asset Management was the stock’s leading stakeholder in Q2, owning Microsoft Corporation (NASDAQ:MSFT) shares worth over $7.3 billion.
You can also take a look at 10 Tech Stocks to Buy Now According to Billionaire Steve Cohen and 10 Best Stocks to Buy Now According to Billionaire Andreas Halvorsen.
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Disclosure: None. 10 Blue Chip Stocks to Buy According to Billionaire Jim Simons is originally published on Insider Monkey.
