In this article, we discuss the top 5 stock picks of Jim Simons’ 2022 portfolio. If you want to read our detailed analysis of Simons’ stock picks and hedge fund history, go directly to Jim Simons’ Portfolio in 2022: Top 10 Stock Picks.
5. Verisign, Inc. (NASDAQ:VRSN)
Renaissance Technologies’ Stake Value: $893.53 million
Percentage of Renaissance Technologies’ 13F Portfolio: 1.04%
Number of Hedge Fund Holders: 34
Verisign, Inc. (NASDAQ:VRSN) deals in the provision of domain name registry and internet infrastructure services. On April 29, Baird analyst Rob Oliver downgraded Verisign, Inc. (NASDAQ:VRSN) to ‘Neutral’ from ‘Outperform’, and reduced the price target to $210 from $260. The analyst expects “sudden domain uncertainty” weighing on the shares, as the company lowered its FY2022 estimates owing to a softening of demand after the Covid-related surge in recent months, and an incremental weakness in the macro setup.
Billionaire Jim Simons owned 4.01 million shares of Verisign, Inc. (NASDAQ:VRSN) worth $893.5 million in the first quarter of 2022, making him the firm’s second largest shareholder after Warren Buffett’s Berkshire Hathaway. Out of all the hedge funds tracked by Insider Monkey, 34 reported ownership of stakes in Verisign, Inc. (NASDAQ:VRSN) at the end of the fourth quarter. This showed a downward trend from the preceding quarter where 40 hedge funds were long on the company shares.
In the first quarter of 2022, Verisign, Inc. (NASDAQ:VRSN) beat market estimates on EPS by $0.05. Quarterly revenue of $346.9 million was also above consensus estimates by $3.97 million.
Here is what investment firm Baron Funds had to say about the prospects of Verisign, Inc. (NASDAQ:VRSN) in its Q4 2021 investor letter:
“Verisign, Inc. provides internet infrastructure services worldwide and is best known for its exclusive role managing the .com and .net domains, for which it receives annual fees from all those domain owners. Shares of Verisign gained after reporting strong revenue growth and operating margins that exceeded Wall Street forecasts. We continue to be positive on Verisign’s business, based on its strong competitive position, capacity for global growth in domain names, and its ongoing ability to generate substantial free cash flow.”
4. Gilead Sciences, Inc. (NASDAQ:GILD)
Renaissance Technologies’ Stake Value: $921.00 million
Percentage of Renaissance Technologies’ 13F Portfolio: 1.08%
Number of Hedge Fund Holders: 54
Gilead Sciences, Inc. (NASDAQ:GILD) is a biopharmaceutical firm based in California. It posted earnings per share of $2.12 for the first quarter, beating estimates by $0.31. Its revenue for Q1 stood at $6.59 billion, which was above estimates by $309.4 million. The firm has grown its dividend yield for 6 years in a row, and offers an impressive yield of 4.57% as of May 20.
On May 16, Piper Sandler analyst Do Kim kept a ‘Neutral’ rating on Gilead Sciences, Inc. (NASDAQ:GILD) shares and decreased the firm’s price target to $69 from $73. The analyst expects the firm’s pipeline studies to resume in the next few weeks given that the FDA has lifted the clinical hold on enacapavir, allowing clinical studies to resume. Kim holds that the long-term opportunity around lenacapavir is intact.
54 hedge funds were long Gilead Sciences, Inc. (NASDAQ:GILD) at the close of the fourth quarter, up from 55 in the preceding quarter. The total value of Q4 hedge fund holdings stood at $2.36 billion. Arrowstreet Capital, with 18 million shares worth $1.07 billion, was the largest shareholder of the biopharmaceutical firm in the first quarter of 2022.
Here is what ClearBridge Investments had to say about Gilead Sciences, Inc. (NASDAQ:GILD) in its Q4 2021 investor letter:
“Other pharma companies are providing solutions as well. Biopharmaceutical company Gilead Sciences’ remdesivir, sold under the brand name Veklury, is a broad-spectrum antiviral medication administered by intravenous infusion; it can shorten the time to recovery in hospitalized patients and reduce the risk of hospitalization and death in non-hospitalized patients.”
3. The Kroger Co. (NYSE:KR)
Renaissance Technologies’ Stake Value: $942.44 million
Percentage of Renaissance Technologies’ 13F Portfolio: 1.1%
Number of Hedge Fund Holders: 41
The Kroger Co. (NYSE:KR) is a retail giant based in the United States which operates a range of food and drug stores, multi-department stores, and warehouses. It offers its shareholder a solid dividend yield of 1.73% as of May 20, and has grown its yield for 16 years in a row.
Jim Simons’ owned 16.42 million shares of The Kroger Co. (NYSE:KR) at a value of $942.44 million, amounting to a 1.1% slice of his total holdings. At the close of Q4 2021, 41 hedge funds were long on the company shares, compared to 39 in the previous quarter.
BofA analyst Robert Ohmes upgraded The Kroger Co. (NYSE:KR) to ‘Buy’ from ‘Neutral’ on April 8, with a price target of $75, up from $61. The analyst notes that the firm’s market share trends could be improving, given broad-based inflation is driving consumers to retailers with more variety as individuals shift their consumption.
In March, The Kroger Co. (NYSE:KR) announced a strategic partnership with NVIDIA (NASDAQ:NVDA) to “reimagine the shopping experience using AI-enabled applications and services.” The two firms will build an AI lab along with a demonstration centre to expand Kroger’s freshness initiatives, improve shipping logistics, and create a better shopping experience in stores through digital twin simulations.
2. Tesla, Inc. (NASDAQ:TSLA)
Renaissance Technologies’ Stake Value: $1.67 billion
Percentage of Renaissance Technologies’ 13F Portfolio: 1.96%
Number of Hedge Fund Holders: 91
Jim Simons’ Renaissance Technologies increased its stake in EV-maker Tesla, Inc. (NASDAQ:TSLA) by 110% in the first quarter of 2022, coming in at 1.55 million shares valued at $1.67 billion. The company’s shares have lost 33.48% in the last month, as the market reacts nervously to founder Elon Musk’s $44 billion proposal to buy social media firm Twitter (NYSE:TWTR).
On May 19, Wedbush analyst Daniel Ives lowered the firm’s price target on Tesla, Inc. (NASDAQ:TSLA) to $1,000 from $1,400, and kept an ‘Outperform’ rating on the company shares. The success of the firm’s demand and supply story in China underpins the analyst’s long-term bullish stance on the EV maker. However, the supply chain issues in China due to the Shanghai lockdowns have been “an epic disaster”, according to the analyst, who sees a slower growth trajectory for Tesla in the key market of China into the second half of the year.
Investors were seen piling into Tesla, Inc. (NASDAQ:TSLA). At the close of the fourth quarter of 2021, 91 hedge funds were long on the company shares, as opposed to 60 in the previous quarter. Cathie Wood was the largest shareholder of the firm in the first quarter of 2022, with her ARK Investment Management holding a $1.71 billion stake.
Quarterly revenue at the end of March was recorded at $18.76 billion, above estimates by $917.8 million. Tesla, Inc. (NASDAQ:TSLA) posted EPS of $3.22 in the first quarter, beating analysts’ forecasts by $0.95.
Here is what investment firm Baron Funds had to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“During the first quarter, we bought back shares in Tesla, Inc., which designs, manufactures, and sells electric vehicles, solar products, energy storage solutions, and batteries. We believe that despite the run in the stock over the last few years, Tesla presents a favorable risk/reward profile and remains a Big Idea with only about 1% market share of the automotive market. Since we bought the stock during the first quarter, shares increased 27.1%, despite a complex supply-chain environment, on continued revenue growth and record profitability. Robust demand and operational optimization allow the company to offset inflationary pressures while vertical integration provides flexibility around supply bottlenecks. Moreover, we expect new localized manufacturing capacity to drive additional efficiencies while software initiatives, including the autonomous driving program, are accelerating, offering valuable optionality to the stock.”
1. Novo Nordisk A/S (NYSE:NVO)
Renaissance Technologies’ Stake Value: $2.04 billion
Percentage of Renaissance Technologies’ 13F Portfolio: 2.39%
Number of Hedge Fund Holders: 28
Novo Nordisk A/S (NYSE:NVO) is a Danish biopharmaceutical firm which is the global market leader in insulin treatments used for diabetes. It was the largest holding in the Q1 2022 portfolio of Jim Simons, with 18.38 million shares worth more than $2 billion and representing 2.39% of the billionaire’s total portfolio.
On May 12, Barclays analyst Emmanuel Papadakis maintained an ‘Overweight’ rating on Novo Nordisk A/S (NYSE:NVO) shares, and increased the price target to DKK 875 from DKK 850. The company shares have soared in 31.88% in the last 12 months as of May 20, and its future prospects look compelling as diabetes becomes a more prevalent disease around the world.
For the first quarter, Novo Nordisk A/S (NYSE:NVO) reported earnings per share of $0.88, exceeding consensus estimates by $0.06. Its quarterly revenue of $6 billion also beat market estimates by $464.2 million, and increased 9.93% year-on-year.
Out of all the hedge funds tracked by Insider Monkey, 28 held positions in Novo Nordisk A/S (NYSE:NVO) at the close of Q4 2021 with a collective price tag of $4.43 billion. In contrast, 27 hedge funds held $4.05 billion worth of positions in the company a quarter ago.
Investment firm LRT Capital Management talked about Novo Nordisk A/S (NYSE:NVO) in its Q4 2021 investor letter. The fund said:
“Novo Nordisk is the global leader in insulin, which is, sadly, a growing business as more and more people around the world suffer from diabetes. Millions of people need daily injections of insulin to stay alive, a number that, unfortunately, is likely to continue to grow by millions more in the coming decade. It may seem at first glance that insulin should be a commoditized business, after all, it was discovered and synthesized over a hundred years ago, but nothing could be further from the truth. There are many types of insulin and Novo Nordisk has spent billions on R&D over the years to develop new products. On February 11th, the company reported favorable results from a phase-3 trial of Semaglutide, a drug that is currently used for Type 2 diabetes treatment. The study evaluated the use of Semaglutide for weight loss treatment in non-diabetic patients and found a significant impact on weight loss for patients receiving Semaglutide vs. the placebo control group. If Semaglutide is approved for weight loss treatment, we expect it will be meaningfully accretive to the company’s bottom line.
The company’s proprietary product line supports returns on invested capital of over 40%, and while sales growth is relatively slow (+6% annualized CAGR over the past decade), the company’s shares trade at a reasonable valuation of only 22x forward earnings. For a company with an extremely predictable business, high returns on capital, and an easily forecastable future, we believe this to be highly attractive.”
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