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.”
4. UnitedHealth Group Incorporated (NYSE:UNH)
Simons’ Stake Value: $157.9 million
Percentage of Jim Simons’ 13F Portfolio: 0.19%
Number of Hedge Fund Holders: 105
UnitedHealth Group Incorporated (NYSE:UNH) is a healthcare company based in Minnesota that offers services ranging from health care services, pharmacy care services and health benefit plans. Ranked fourth on the list of the 10 stocks Jim Simons’ quant hedge fund is buying, UnitedHealth Group Incorporated (NYSE:UNH) has a market capitalization of $382.14 billion.
According to the recent 13F Filings, Jim Simons’ Renaissance Technologies holds 394,435 shares of UnitedHealth Group Incorporated (NYSE:UNH), amounting to over $157.9 million in worth and accounting for 0.19% of the fund’s portfolio. At the end of the second quarter of 2021, 105 hedge funds in the database of Insider Monkey held stakes worth $13.1 billion in UnitedHealth Group Incorporated (NYSE: UNH), up from 89 in the preceding quarter worth $12.1 billion.
On September 27, SVB Leerink analyst Whit Mayo initiated coverage of UnitedHealth Group Incorporated (NYSE:UNH) with an Outperform rating and $480 price target.
In its Q2 2021 investor letter, ClearBridge Investments mentioned UnitedHealth Group Incorporated (NYSE: UNH) and discussed its stance on the firm. Here is what the fund said:
“A good way to conceptualize how we think about portfolio construction is to picture a pyramid. At the bottom of the pyramid are the durable compounding growth companies that form the strong foundation, resilience, and consistency for the Strategy. We think these companies should comprise just under half of portfolio assets and feature annual revenue growth rates ranging from two times GDP up to 20% as well as healthy free cash flow generation.
UnitedHealth Group, a name we have owned in the Strategy since 1992, is a good example of a long-term compounder, having grown its revenue base from approximately $600 million to north of $260 billion over that time frame. It remains constantly focused on investing in new growth drivers such as telemedicine and health care analytics. Broadcom and Comcast have delivered similar long-term appreciation through a combination of organic growth, capital deployment into new and adjacent opportunities through merger and acquisition activity as well as returning capital to shareholders through buybacks and dividends.”
3. Micron Technology, Inc. (NASDAQ:MU)
Simons’ Stake Value: $171.9 million
Percentage of Jim Simons’ 13F Portfolio: 0.21%
Number of Hedge Fund Holders: 87
Micron Technology, Inc. (NASDAQ:MU) is a technology company based in Idaho that engages in the provision of innovative memory and storage solutions. Ranked third on the list of the 10 stocks in Jim Simons’ quant hedge fund is buying, Micron Technology, Inc. (NASDAQ:MU) has a market capitalization of $84.63 billion.
At present, Jim Simons’ Renaissance Technologies holds 2.02 million shares of Micron Technology, Inc. (NASDAQ:MU), worth $171.9 million and representing 0.21% of the fund’s portfolio. At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Micron Technology (NASDAQ:MU), down from 100 in the preceding quarter worth $7.6 billion.
On September 27, Raymond James analyst Chris Caso lowered the firm’s price target on Micron Technology, Inc. (NASDAQ:MU) to $100 from $120 and kept a Strong Buy rating on the shares.
In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ:MU) was one of them. Here is what the fund said:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
2. Caterpillar Inc. (NYSE:CAT)
Simons’ Stake Value: $226.9 million
Percentage of Jim Simons’ 13F Portfolio: 0.28%
Number of Hedge Fund Holders: 62
Caterpillar Inc. (NYSE:CAT), is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Ranked second on our list of the 10 stocks Jim Simons’ quant hedge fund is buying, Caterpillar Inc. (NYSE:CAT) has a market capitalization of $109.49 billion.
Jim Simons’ Renaissance Technologies currently holds more than 1.04 million shares of Caterpillar Inc. (NYSE:CAT), amounting to over $226.9 million and accounting for 0.28% of the fund’s total investment portfolio. By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in Caterpillar Inc. (NYSE: CAT) worth roughly $5.3 billion. This is compared to 53 hedge funds in the previous quarter with a total stake value of approximately $5 billion.
In the second quarter of 2021, Caterpillar Inc. (NYSE:CAT) had an earnings per share of $2.60, beating estimates by $0.19. The company’s revenue was $12.89 billion, up 28.93% on a year-over-year basis and beating estimates by $360.55 million.
In the Q2 2021 investor letter of Oakmark Funds, the fund mentioned Caterpillar Inc. (NYSE:CAT). Here is what the fund said:
“Having followed the company closely for north of a decade, Caterpillar is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”
1. NIO Inc. (NYSE:NIO)
Simons’ Stake Value: $281.6 million
Percentage of Jim Simons’ 13F Portfolio: 0.35%
Number of Hedge Fund Holders: 34
NIO Inc. (NYSE:NIO) is a multinational automobiles manufacturer based in Shanghai. The company specializes in the development of electric vehicles. NIO Inc. (NYSE:NIO) has a market capitalization of $60.25 billion, and is ranked first on the list of the 10 stocks Jim Simons’ quant hedge fund is buying.
According to the recent 13F Filings, Jim Simons’ Renaissance Technologies holds 5.29 million shares of NIO Inc. (NYSE:NIO), amounting to over $281.6 million in worth and representing 0.35% of the fund’s total portfolio value. By the end of the second quarter of 2021, 34 hedge funds out of the 873 tracked by Insider Monkey held stakes in NIO Inc. (NYSE:NIO) worth roughly $2.06 billion. This is compared to 28 hedge funds in the previous quarter with a total stake value of approximately $1.32 billion.
On August 11, NIO Inc. (NYSE:NIO) issued its earnings report for the second quarter of 2021, with reported earnings per share at -$0.06, surpassing market estimates by $0.05. In addition to this, the company generated revenues of $1.30 billion, beating estimated revenues by $12.26 million.
On September 26, HSBC analyst Yuqian Ding lowered the firm’s price target on Nio to $47 from $69 and kept a Buy rating on the shares.
You can also take a peek at Unknown Billionaire Phill Gross’ Top 10 Stock Picks and Top 10 High Growth Stocks To Buy in 2021.
