Renaissance Technologies, founded by billionaire Jim Simons, has filed its latest 13F with the U.S. Securities and Exchange Commission disclosing its holdings as of the end of the first quarter of 2015. Jim Simons was one of the top-earning hedge fund managers in 2014, raking in $1.1 billion, according to Forbes. Renaissance Technologies is known for its high frequency strategies but it also has a long-term oriented investment strategy that has a pretty impressive track record. The fund revealed a total of 3,133 position in its latest 13F. The portfolio is valued at about $47 billion, up from $41.4 billion in the previous quarter. Renaissance Technologies started more than 620 new positions in the quarter, while it cut stakes in over 400 companies. Top holdings, in terms of value, of the fund include Colgate-Palmolive Company (NYSE:CL), Novo Nordisk A/S (ADR)(NYSE:NVO), Alaska Air Group Inc. (NYSE:ALK), and Amazon.com Inc. (NASDAQ:AMZN).
We track hedge funds to identify their best ideas. Our research revealed that imitating hedge funds’ top ideas has historically managed to generate alpha even though the filings are delayed up to a maximum of 45 days. As part of our backtesting, we used a 60-day delay to be on the conservative side, and our research showed that the 15 most popular small-cap stocks among hedge funds still outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We have been sharing and tracking the performance of these stocks since the end of August 2012 and they have returned 143% over the last 32.5 months, outperforming the S&P 500 ETF by over 80 percentage points (see more details here).
We also spared some time and analyzed the historical performance of RenTech’s stock picks. The funds’ most picks are very short-term oriented and paying attention to them is a waste of time. However, its top positions performed much better than index funds. The funds’ top picks have, usually, a lower risk profile than the rest of the market. Between 1999 and 2012, the top 5 stock positions in RenTech’s 13F portfolio actually beat the S&P 500 Total Return Index by more than 3 percentage points per year. Three percentage points may not sound a lot but you have to keep in mind that these stocks have lower risk profile and perform much better during rough periods. For instance, imitating Jim Simons’ top 5 stock holdings would have returned an average of 1.17% per month between 2008 and 2012 and outperformed the S&P 500 Total Return Index by more than 10 percentage points per year. Most fund managers fail to beat the market and investors have been switching to low cost index funds as a result of that. Our research shows that investors would have been better off by simply imitating RenTech’s top 5 picks. Now let’s take a closer look at these stocks.
Colgate-Palmolive Company (NYSE:CL) remains the top holding of Renaissance Technologies, with an ownership of 12.74 million, worth $883.6 million. The stake is slightly up from 12.58 million shares the fund held previously. Colgate-Palmolive Company (NYSE:CL) is a $62.1 billion market cap consumer products company, and pays an annual $1.52, on a yield of 2.21%. Colgate-Palmolive Company (NYSE:CL) posted net income of $542 million in the first quarter of 2015, an increase from $388 million in the same period last year. EPS for the quarter was $0.59 versus $0.42 in 2014. However, the company’s worldwide net sales decrease by 6.0% to $4.1 billion. Other investors with big positions in the company include First Eagle Investment Management, which held 4.87 million shares at the end of the first quarter.
Next up is Novo Nordisk A/S (ADR) (NYSE:NVO), in which Renaissance Technologies disclosed holding 14.51 million shares, down from 15.61 million shares the held earlier. The holding is valued at $774.9 million. Novo Nordisk (NYSE:NVO) is a healthcare company, with a market cap of $114.4 billion. Novo Nordisk has risen by an impressive 167.69% since May 2014. It has gained 33% since January. Novo Nordisk’s net profit in the first quarter rose by 53% to 9.88 billion Danish kroner, or $1.48 billion, from DKK 6.46 billion in the same period last year. The company reported a 24% increase in revenues for the quarter to 25.20 billion kroner from 20.34 billion kroner last year. Other largest shareholders of the company include Ken Fisher’s Fisher Asset Management and Arrowstreet Capital.
Third largest holding is represented by Alaska Air Group Inc. (NYSE:ALK), in which Renaissance Technologies held 6.82 million shares, valued at $451.6 million. The stake represents over 10% decrease from 7.81 million shares the fund held previously. Shares of the company gained 39.12% during the past year. The company posted record net income of $149 million in the first quarter, representing a 67% increase over a year ago. Reported adjusted earnings per share (EPS) was $1.12, up from First Call analyst consensus estimate of $1.10 per share. On May 15, Alaska Air Group (NYSE:ALK) CFO Brandon Pedersen unloaded 5,000 shares of the company’s stock at an average price of $66.36. Following the sale, Pedersen still owns 19,124 shares of the company. Other shareholders that see value in Alaska Air Group Inc. (NYSE:ALK) include PAR Capital Management, led by Paul Reeder and Edward Shapiro. The investor held 4.55 shares of the company at the end of March.
Amazon.com Inc. (NASDAQ:AMZN) occupies the fourth position. Renaissance Technologies disclosed a new position in Amazon.com Inc. (NASDAQ:AMZN), owning 1.15 shares, valued at $429 million. The $198.4-billion market cap e-commerce titan booked a net loss of $57 million in the first quarter, versus net income of $108 million a year ago. Net sales increased 15% to $22.72 billion in the first quarter, compared with $19.74 billion in first quarter 2014. The company’s stock has increased by 43.1% since May 2014. This also led to Bernstein hiking Amazon.com, Inc. (NASDAQ:AMZN)’s price target to $600 from $450, while reiterating its ‘Outperform’ rating.
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