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Renaissance Technologies Is Behind Apple Inc. (AAPL) All The Way. What About Microsoft Corporation (MSFT)?

We track quarterly 13F filings from hundreds of hedge funds and other notable investors, including Renaissance Technologies, the large and highly successful hedge fund which has made founder Jim Simons a multi-billionaire. Our research shows that the most popular small cap stocks among hedge funds, as determined by analyzing 13Fs, earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). A small cap portfolio putting this strategy into practice beat the market by 33 percentage points since inception last summer. We also like to go through 13Fs from individual managers, treating them as stock screens which can potentially identify interesting picks in a number of areas. Read on for our quick take on the five largest positions in Renaissance’s portfolio as of the end of June with both trailing and forward P/Es of 13 or lower:

The fund reported a position of almost 14 million shares in Intel Corporation (NASDAQ:INTC) in the filing. With the company struggling in the current environment due to shifting consumer preferences, sales were down moderately last quarter compared to the second quarter of 2012 and contributed to a more than 20% decrease in earnings. Markets have reacted by driving the price down to 12 times trailing earnings and the dividend yield up above 4%, potentially making the stock an income pick. Billionaire Kerr Neilson’s Platinum Asset Management initiated a large position in Intel between April and June (check out more stocks Platinum was buying).

Another large tech company experiencing falling profits in Renaissance’s portfolio was Apple Inc. (NASDAQ:AAPL). Apple Inc. (NASDAQ:AAPL) has fallen to third on our list of the most popular stocks among hedge funds (see the full top ten list) as fund managers continue to be concerned about the company’s falling margins. The 27% drop in the company’s stock price over the last year has brought the trailing P/E down to 12, and that is with a large share of Apple Inc. (NASDAQ:AAPL)’s market capitalization in the form of cash and marketable securities. CEO Tim Cook has shown some signs of moving towards returning more cash to shareholders, primarily through large buyback programs.


Alaska Air Group, Inc. (NYSE:ALK) was another of the fund’s cheap stock picks as the filing disclosed ownership of 4.6 million shares. As with many airlines, Alaska Air features low earnings multiples: specifically, the trailing and forward P/Es are 12 and 9 respectively and looking out over analyst expectations for the next several years the five-year PEG ratio is 0.9. This is in fact a significant premium to the legacy carriers. Lower costs have helped the company increase its margins leading to at least a temporary bump in profits. PAR Capital Management had 4.2 million shares in its portfolio according to that fund’s own 13F.

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