We track corporate insiders and hedge funds because we think they have an edge over ordinary investors. Insiders know their companies and the industry much better than other investors. Hedge funds usually hire experienced investment professionals and devote significant resources in researching stocks. In this article, we are going to focus on the stocks that insiders and billionaire Jim Simons are bullish about. Simons is one of the most famous hedge fund managers. He owns 25 to 50 percent of Renaissance Technologies. He is also the largest investor in Medallion Fund, one of the funds managed by Renaissance and the best hedge fund tracked by Insider Monkey. During the past year, Renaissance Institutional Equities Fund gained 34.66% through December 23rd, heavily beating the 1.57% for S&P 500 index in the same period. Below we compiled a list of stocks both Simons and insiders love. All stocks were purchased by at least two insiders during the past month and Simons’ Renaissance Technologies invested at least $10 million in these positions at the end of September.
|Company Name||Ticker||Value (*1000)||Activity||Insiders|
|REYNOLDS AMERICAN INC||(RAI)||51408||17%||1|
|N I I HOLDINGS INC||(NIHD)||31828||New||3|
|VISTAPRINT N V||(VPRT)||26338||12%||1|
|FIRST NIAGARA FINL||(FNFG)||25873||131%||8|
|UNIVERSAL DISPLAY CORP||(PANL)||17361||New||1|
|ENERGY TRANSFER EQUITY||(ETE)||15561||2000%||1|
|BANK OF HAWAII CORP||(BOH)||13159||209%||1|
|I D E X X LABORATORIES||(IDXX)||11246||-30%||1|
The largest position with an insider purchase in Simons’ portfolio is Consolidated Edison Inc (ED). During the third quarter, Renaissance Technologies significantly boosted its ED stakes by 364%. As of September 30, 2011, the fund had $97 million invested in ED shares. ED was also bought by ten insiders during the past month. At the end of 2011, ten officers/directors of Consolidated Edison, including Robert Hoglund, Joann Ryan, and Frances Resheske purchased about 500 shares at $59.47. ED is trading at $59.09 today. It has a market cap of $17B and a P/E ratio of 15.91. Besides Simons, Louis Bacon and Cliff Asness are also bullish about ED. Bacon’s Moore Global Investment initiated a brand new $21 million of ED shares during the third quarter. ED returned 4.84% so far since the end of the third quarter, versus 14.91% for SPY in the same period.
Simons also largely increased his stakes in Apache Corp (APA). Renaissance Technologies reported to own $74 million worth of APA shares at the end of the third quarter, up 165% from the end of June. The stock returned 20.13% since the end of September, beating the market by more than 5 percentage points. APA has a market cap of $37B and a relatively low P/E ratio of 9.34. There was also one insider bought APA during the past month. William Montgomery bought 2000 shares at $88.715 per share on December 20. Now APA is trading at $95.21 per share. The stock is also quite popular among hedge funds. There are 30 hedge funds with APA positions at the end of September. Both Ric Dillon’s Diamond Hill Capital and Boykin Curry’s Eagle Capital Management had over $100 million invested in APA.
Other large-cap stocks that both Simons and insiders love include BlackRock Inc (BLK), Reynolds American Inc (RAI), VMware Inc (VMW), and LyondellBasell Industries NV (LYB). Academic research has shown that insider purchases on average outperform the market in the following 12-month period. We believe that investors can beat the market over the long term by imitating the stock picks of corporate insiders and Jim Simons.