In this article, we will take a look at the 5 stocks Jim Simons’ quant hedge fund is buying. If you want to read our comprehensive analysis of Simons’ history, investment philosophy, and hedge fund performance, go directly to Jim Simons’ Quant Hedge Fund is Buying These 10 Stocks.
5. Snowflake Inc. (NYSE:SNOW)
Simons’ Stake Value: $155.4 million
Percentage of Jim Simons’ 13F Portfolio: 0.19%
Number of Hedge Fund Holders: 70
Snowflake Inc. (NYSE:SNOW) is a cloud-based data storage and analytics services company based in Montana. Ranked fifth on the list of the 10 stocks Jim Simons’ quant hedge fund is buying, Snowflake Inc. (NYSE:SNOW) has a market capitalization of $93.64 billion.
Jim Simons’ Renaissance Technologies currently holds 642,700 shares of Snowflake Inc. (NYSE:SNOW), worth over $155.4 million and representing 0.19% of the fund’s portfolio value. At the end of the second quarter of 2021, 70 hedge funds in the database of Insider Monkey held stakes worth $12.5 billion in Snowflake Inc. (NYSE:SNOW). This is compared to 71 hedge funds in the preceding quarter with stake worth $12.96 billion.
On August 26, investment advisory Cowen maintained an Outperform rating on Snowflake Inc. (NYSE: SNOW) stock and raised the price target to $335 from $310.
Out of the hedge funds being tracked by Insider Monkey, Altimeter Capital Management is a leading shareholder in Snowflake Inc. (NYSE: SNOW) with 24.95 million shares worth more than $6.03 billion.
RiverPark Large Growth Fund, in their Q1 2021 investor letter, mentioned Snowflake Inc. (NYSE:SNOW). Here is what the fund said:
“We also established a position in Snowflake during the quarter. Snowflake offers cloud-based data storage and analytics, generally termed “data warehouse-as-a-service.” The data warehousing market—created by the massive, growing amount of user, customer, and account data and the need to search and analyze it—has historically stored its data on physical servers located on-premises. The cloud data platform market—storing data off-premises on cloud servers—is a relatively new $70 billion+ market. Significantly, incremental warehouse data capacity and renewals are expected to be driven by and to the cloud, with more than 75% of databases in the cloud by 2022.
Snowflake requires absolutely no infrastructure management from its users, is fully scalable for each customer, runs on Amazon, Microsoft, or Google cloud platforms, and most critically, Snowflake helps companies analyze their data. The company also has a unique, customer-aligned billing model based on usage. All of which has led to Snowflake being among the leaders of this highly fragmented market, posting 124% revenue growth last year. SNOW’s growth comes from the combination of more customers—which grew 73% last year—and customers buying more services—the company boasts an amazing 150%+ net customer retention. The company’s growing scale has also led to increasing gross margin and operating leverage, up 1,100 basis points and 8,200 basis points, respectively, over the past two years. The company has guided to FCF break-even this year, and with the company’s capital expenditure-light model—Snowflake uses the public cloud for hosting—we expect FCF to grow much faster than revenue growth, which we forecast to grow comfortably more than 50% per year for the next several years. Additionally, we have great confidence in the SNOW management team, which previously had an enormously successful run guiding one of our other core Cloud software holdings ServiceNow.”
