In this article, we discuss 10 defensive stocks that quant billionaire Jim Simons loves.
James Simons, the founder of New York-based Renaissance Technologies, manages an equity portfolio worth more than $84 billion at the end of the second quarter of 2022. Simons is worth more than $28 billion and is often called the smartest billionaire in the world because of his advanced degree in Mathematics and the employment of quant strategies at the fund that have helped him turn it into one of the largest investment firms in the United States. He is one of the fifty richest men in the world, per a list maintained by Forbes magazine.
As soaring inflation and rising interest rates hammer stocks, investors are eagerly looking towards titans like Simons to guide them through the crisis. Some of the top defensive stocks in the Simons portfolio include Berkshire Hathaway Inc. (NYSE:BRK-B), Merck & Co., Inc. (NYSE:MRK), and Exxon Mobil Corporation (NYSE:XOM). During the second quarter, his hedge fund made new purchases in 706 stocks, additional purchases in 1,963, sold out of 567, and reduced holdings in 1,490 equities.
Simons likes to keep a low profile and does not often appear on television. Recently, the billionaire made a rare appearance at the Abel Prize Week. Although Simons is famous for his reliance on algorithms to decide the bulk of trades, he defended the traditional stock picking techniques of value investors like Warren Buffett and asserted that businesses run by honest and brilliant executives do not have a chance of becoming obsolete, even as technology permeates most aspects of our lives.
Our Methodology
The companies listed below were taken from the investment portfolio of Renaissance Technologies at the end of the second quarter of 2022. Stocks that operate in defensive sectors like energy, consumer staples, and healthcare were preferred for the list. The analyst ratings and business fundamentals of the firms are also discussed to provide readers with some additional context for their investment choices. The hedge fund sentiment around each stock was calculated using the data of around 900 hedge funds tracked by Insider Monkey in the second quarter of 2022.
Jim Simons of Renaissance Technologies
Quant Billionaire Jim Simons Loves These Defensive Stocks
10. The Kroger Co. (NYSE:KR)
Number of Hedge Fund Holders: 49
The Kroger Co. (NYSE:KR) operates as a retailer through combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. At the end of June 2022, Renaissance Technologies owned 16.7 million shares in The Kroger Co. worth $792 million, representing 0.93% of the portfolio. The firm is placed tenth on our list of defensive stocks in the portfolio of quant billionaire Jim Simons.
On September 12, Evercore ISI analyst Michael Montani maintained an In Line rating on The Kroger Co. stock and raised the price target to $54 from $51, noting the firm was showing solid execution amidst a favorable backdrop.
At the end of the second quarter of 2022, 49 hedge funds in the database of Insider Monkey held stakes worth $4.3 billion in The Kroger Co., compared to 45 in the previous quarter worth $5.2 billion.
Just like Berkshire Hathaway Inc., Merck & Co., Inc., and Exxon Mobil Corporation, The Kroger Co. is one of the defensive stocks quant billionaire Jim Simons loves.
9. United Therapeutics Corporation (NASDAQ:UTHR)
Number of Hedge Fund Holders: 49
United Therapeutics Corporation (NASDAQ:UTHR) is a biopharma company that engages in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening diseases. The firm is ranked ninth on our list of defensive stocks in the portfolio of quant billionaire Jim Simons. The hedge fund chaired by Jim Simons owned close to 2.7 million shares of United Therapeutics Corporation at the end of June 2022 worth $658 million, representing 0.77% of the portfolio.
On September 12, Wedbush analyst Andreas Argyrides assumed coverage of United Therapeutics Corporation stock with an Outperform rating and a price target of $263, noting the firm had an opportunity to invest in growth through continued innovation.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm VenBio Select Advisors is a leading shareholder in United Therapeutics Corporation, with 2.97 million shares worth more than $699.8 million.
8. Gilead Sciences, Inc. (NASDAQ:GILD)
Number of Hedge Fund Holders: 58
Gilead Sciences, Inc. (NASDAQ:GILD) is a biopharmaceutical company that discovers, develops, and commercializes medicines. Regulatory filings reveal that Renaissance Technologies owned over 13.4 shares of Gilead Sciences, Inc. at the end of June 2022 worth $828 million, representing 0.98% of the total portfolio.
On September 20, Piper Sandler analyst Do Kim maintained a Neutral rating on Gilead Sciences, Inc. stock with a price target of $79, noting the firm had multiple pipeline options in early development.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Gilead Sciences, Inc., with 15.7 million shares worth more than $968 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Gilead Sciences, Inc. was one of them. Here is what the fund said:
“Other pharma companies are providing solutions as well. Biopharmaceutical company Gilead Sciences, Inc. 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.”
7. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 59
Chevron Corporation (NYSE:CVX) engages in integrated energy and chemical operations worldwide. The firm is ranked seventh on our list of defensive stocks in the portfolio of quant billionaire Jim Simons. Securities filings reveal that Renaissance Technologies owned 5.7 million shares of Chevron Corporation at the end of the second quarter of 2022 worth $837 million, representing a very small portion of the portfolio.
On September 12, Piper Sandler analyst Ryan Todd maintained an Overweight rating on Chevron Corporation stock and raised the price target to $190 from $189, noting that near-record distillate margins continue to drive upside to refining estimates.
At the end of the second quarter of 2022, 59 hedge funds in the database of Insider Monkey held stakes worth $26 billion in Chevron Corporation, compared to 53 the preceding quarter worth $27.99 billion.
In its Q1 2022 investor letter, Diamond Hill, an asset management firm, highlighted a few stocks and Chevron Corporation was one of them. Here is what the fund said:
“Other top contributors in Q1 included multinational energy company Chevron Corp.. The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
6. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 61
Abbott Laboratories (NYSE:ABT) discovers, develops, manufactures, and sells healthcare products worldwide. The hedge fund chaired by Jim Simons owned close to 4.2 million shares of Abbott Laboratories at the end of June 2022, worth $458 million.
On August 25, Erste Group analyst Hans Engel downgraded Abbott Laboratories stock to Hold from Buy, predicting that the operating margins would remain stable over the next few years even as COVID-19 test sales declined.
At the end of the second quarter of 2022, 61 hedge funds in the database of Insider Monkey held stakes worth $3.6 billion in Abbott Laboratories, compared to 68 in the preceding quarter worth $4.1 billion.
In addition to Berkshire Hathaway Inc., Merck & Co., Inc., and Exxon Mobil Corporation, Abbott Laboratories is one of the defensive stocks in the portfolio of quant billionaire Jim Simons.
In its Q2 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Abbott Laboratories was one of them. Here is what the fund said:
“Abbott Laboratories was the lone detractor in the quarter as the company preannounced that revenue and earnings this year would be below their previous guidance. We still expect the company to grow earnings more than 20% this year and continue double-digit earnings growth in the years to come. However, weakness in COVID-19 testing revenue is primarily responsible for the guidance reduction. Abbott is a leader in multiple types of COVID-19 diagnostic tests, and the largely successful vaccine rollout globally is leading to less COVID testing than the company expected. Two years ago, these tests obviously accounted for $0 in revenue but recently accounted for nearly $10 billion in annualized revenues as of the fourth quarter of 2020. We have expected COVID testing revenues to decline sequentially every quarter and eventually level out at less than $1 billion per year. We are not surprised by the current reality, but the decline has been more rapid than what management had expected.
Abbott Laboratories is a diversified medical products company with likely strong growth to come from its core businesses outside of COVID testing— our investment thesis was not dependent on pandemic related revenue. While the reduction in guidance is atypical for Abbott’s conversative management team, we do not believe it changes our long-term growth assumptions or the investment case in Abbott.”
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
Exxon Mobil Corporation explores for and produces crude oil and natural gas. Regulatory filings reveal that Renaissance Technologies owned over 7.1 million shares of Exxon Mobil Corporation at the end of June 2022 worth $612 million, representing 0.72% of the total portfolio. The firm is placed fifth on our list of defensive stocks in the portfolio of quant billionaire Jim Simons.
On September 12, Piper Sandler analyst Ryan Todd maintained an Overweight rating on Exxon Mobil Corporation stock and lowered the price target to $108 from $109, noting that despite inflation risk, there was no change to strategic priorities across the upstream coverage.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Exxon Mobil Corporation, with 47.5 million shares worth more than $4.1 billion.
In its Q2 2022 investor letter, First Eagle Investments, an asset management firm, highlighted a few stocks and Exxon Mobil Corporation was one of them. Here is what the fund said:
“Integrated oil and gas giant Exxon Mobil Corporation performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
4. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. operates as a healthcare company worldwide. Latest data shows that Renaissance Technologies owned 6.7 million shares of Merck & Co., Inc. at the end of the second quarter of 2022 worth $616 million, representing 0.73% of the portfolio.
On September 14, Berenberg analyst Luisa Hector upgraded Merck & Co., Inc. stock to Buy from Hold and raised the price target to $100 from $95, noting the simple success stories in the pharma sector remained attractive for investors.
At the end of the second quarter of 2022, 79 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Merck & Co., Inc., compared to 84 in the previous quarter worth $5.9 billion.
In its Q2 2022 investor letter, Sound Shore Management, an asset management firm, highlighted a few stocks and Merck & Co., Inc. was one of them. Here is what the fund said:
“On the positive side, a number of our health care names outperformed, including drug maker Merck & Co.. Benefitting from a best-in-class research and development team, Merck’s progress is being fueled by the impressive growth of its immuno oncology cancer drug, Keytruda. The stock remains attractive at less than 12 times 2023 earnings.”
3. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 80
The Home Depot, Inc. (NYSE:HD) operates as a home improvement retailer. According to regulatory filings, Renaissance Technologies owned 1.7 million shares of The Home Depot, Inc. at the end of June 2022 worth $488 million, representing 0.57% of the portfolio.
On September 1, Atlantic Equities analyst Sam Hudson maintained an Overweight rating on The Home Depot, Inc. stock, noting that despite near-term recession risk, the firm had a unique position as a diversified home improvement retailer.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in The Home Depot, Inc., with 8.4 million shares worth more than $2.2 billion.
In its Q1 2022 investor letter, Diamond Hill Capital , an asset management firm, highlighted a few stocks and The Home Depot, Inc. was one of them. Here is what the fund said:
“The Home Depot, Inc. shares underperformed as continued solid fundamental results were outweighed by concerns about the impact rising mortgage rates may have on the housing market and general inflationary pressures potentially leading to a consumer spending slowdown. We view the long-term prospects and multi-year fundamental outlook as unchanged.”
2. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. operates as a financial services company worldwide. The hedge fund chaired by Jim Simons owned close to 3.9 million shares of JPMorgan Chase & Co. at the end of June 2022 worth $442 million, representing 0.52% of the portfolio.
On September 12, Deutsche Bank analyst Matt O’Connor kept a Buy rating on JPMorgan Chase & Co. stock and lowered the price target to $155 from $174, noting that banks had underperformed this year, largely driven by recession fears.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in JPMorgan Chase & Co., with 7.99 million shares worth roughly $900 million.
In its Q1 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and JPMorgan Chase & Co. was one of them. Here is what the fund said:
“More cyclical sectors, including technology and consumer discretionary, were among the weakest, likely due to rising interest rates and inflation. It was encouraging to see the quarter finish on a strong note with the S&P 500 only about 5% away from its all-time highs. Shares of JPMorgan Chase detracted from performance due to the company’s increased expense guidance, announced in January.”
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. engages in the insurance, freight rail transportation, and utility businesses. Latest data shows that Renaissance Technologies owned close to 1.7 million shares of Berkshire Hathaway Inc. at the end of June 2022 worth $488 million, representing 0.57% of the total portfolio. It is one of the most prominent defensive stocks in the portfolio of quant billionaire Jim Simons.
Berkshire Hathaway Inc. is traditionally referred to as one of the best defensive stocks in the Jim Simons portfolio since the firm has interests in a number of cash-rich businesses with strong pricing power that can withstand recessionary pressures.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Bill and Melinda Gates Foundation Trust is a leading shareholder in Berkshire Hathaway Inc., with 34.7 million shares worth more than $9.5 billion.
In its Q1 2022 investor letter, Diamond Hill Capital , an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. was one of them. Here is what the fund said:
“Diversified holding company Berkshire Hathaway Inc. reported strong earnings during the quarter and benefited from continued share repurchases below intrinsic value. The company also announced significant deployments of excess cash during the quarter, including the acquisition of Alleghany and a large increase in its stake in Occidental Petroleum.”
You can also take a peek at 13 Best Hemp Stocks to Buy Now and Billionaire Dan Loeb’s Top 10 Stock Picks.
Follow Insider Monkey on Twitter
Suggested Articles:
- 12 Best Marijuana Stocks to Invest In
- 15 Most Valuable Weed Companies in the World
- 10 Best Weed Stocks to Buy Now
This article is originally published at Insider Monkey.
