RenTech’s Secret Formula Sent Buy Signals On These Tech Stocks

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Renaissance Technologies is a New York-based hedge fund founded in 1982 by mathematician James “Jim” Simons. Simons, who retired in 2009, is estimated to have a net wealth of $14 billion and Renaissance Technologies is said to be one of the most successful hedge funds of all time. Renaissance Technologies managed to generate mind-numbing returns by utilizing mathematical models and automated algorithmic trading. Like many other hedge funds, Renaissance Technologies suffered from the high volatility in the markets in 2007 and 2008 and lost 8.7% of its Renaissance Institutional Equities Fund’s value in August 2007. However, our research shows that RenTech is one of the best funds to imitate if your goal is to pick promising large-cap stocks. According to the latest round of 13F filings RenTech’s public equity portfolio is valued at $47 billion and is distributed among sectors as follows: 18% towards technology, 16% in finance, and 15% in healthcare. During the first quarter,, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTRwere among the biggest new positions initiated in the technology sector by RenTech.


We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 and these stocks beat the market by 84 percentage points (142% return vs. S&P 500’s 58% gain) over the last 33 months (see the details here).

Follow Jim Simons's Renaissance Technologies

In Inc (NASDAQ:AMZN), Renaissance Technologies bought a stake of 1.15 million shares with a value of $429 million, which has been a wise pick thus far as has increased by 40.1% year-to-date. Video game streaming platform Twitch, which was about to be acquired by Google Inc (NASDAQ:GOOG), was instead was bought by after that deal feel through, though Twitch is set to receive a dangerous new competitor in YouTube, which is about to launch YouTube Gaming in the U.S and U.K during the summer. The launch will indeed put pressure on the popular Twitch and force it to develop its products and platforms as it attempts to keep up with YouTube. Hedge funds flocked into Inc (NASDAQ:AMZN) during the first quarter. There were 96 hedge funds with bullish AMZN positions at the end of March. This figure was only 76 at the end of December. Billionaire Rob Citrone was among the billionaires who initiated brand new positions in Amazon.

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