We recently published a list of Billionaire Quants’ Two Sigma’s 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Thermo Fisher Scientific Inc. (NYSE:TMO) stands against other billionaire quants’ two sigma’s stock picks with huge upside potential.
Two Sigma Advisors is one of the leading players in the quantitative hedge fund space, according to Archive Market Research’s analysis. The quant fund operates as an investment management company and was founded in 2001 by David Siegel, a computer scientist, and John Overdeck, a mathematician. The fund manages $60 billion worth of assets as of April 2025.
Quant funds and their multi-strategy counterparts often do well in the market. A Reuters analysis found that many quant hedge funds posted double-digit growth in 2024. This growth happened despite “negative drivers” in sectors like energy, metals, and European equities. Two Sigma, alongside quant funds like D.E. Shaw and Citadel, also managed solid performance last year.
The hedge fund’s Spectrum Fund returned 10.9% and 14.3% for the Absolute Return Enhanced Fund. But one might argue that for a hedge fund that relies on complex algorithms to make investment decisions, the asset manager should have beat the market. For context, the S&P 500 finished 2024 with a total gain of 25.0%.
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In August last year, the billionaire founders of the hedge fund exited from active management because they couldn’t resolve tension between them.
“Over the past year and a half, we and our senior management team have dedicated significant effort to securing the long-term success and stability of Two Sigma. Throughout this process, our own roles have been a central consideration. Today, we are confident that stepping back from our day-to-day management roles is the right decision at this time,” the co-founders said in a letter to investors.
But recent reports indicate that Overdeck is returning to active management. “John has determined now is the right time for him to return to this role in order to progress certain priorities and decisions he believes are important to the future of Two Sigma,” Two Sigma said in a letter. Siegel chose to remain outside of the fund’s top ranks but had “full confidence” in Scott Hoffman, one of the Co-CEOs who took over last year.
It is good news that Two Sigma won’t be held back by feuding management because they need it to navigate a challenging market. According to a Reuters analysis, the risk of recession is alarming, even though it may not be as clear-cut. The report quoted Zurich Insurance Group’s chief market strategist, Guy Miller, who said that the risk of a US recession is quite plausible. “Recession risks have risen markedly even if there are some deals struck on tariffs. The risk of a U.S. recession is 50-50, it’s that close.”
Our Methodology
We sifted through Two Sigma Advisors’ SEC Q4 2024 13F filings to create this list. We primarily targeted the fund’s most valuable equity holdings (excluding ETFs and options) and then ranked the picks based on analyst price targets as of May 8, 2025. We picked stocks with an upside potential of at least 30% and then selected the top 10. We have also added the broader hedge fund sentiment for the stocks, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A workstation in a research lab stocked with laboratory products and services.
Thermo Fisher Scientific Inc. (NYSE:TMO)
Two Sigma Advisors Stake Value: $485,478,636
Upside Potential as of May 8: 38.03%
Number of Hedge Fund Holders: 100
Thermo Fisher Scientific Inc. (NYSE:TMO) is a global leader in scientific research and laboratory solutions. It provides tools, technologies, and services to help scientists, healthcare professionals, and businesses advance discoveries and improve lives.
The company has recently made several moves to strengthen its market position. On April 24, 2025, Thermo Fisher Scientific Inc. (NYSE:TMO) announced a $2 billion investment in the US over the next four years. The first $1.5 billion will be allocated to capital expenditures for enhancing and expanding US manufacturing operations, and $500 million will go to R&D focused on high-impact innovation. This investment builds on the company’s substantial presence in US manufacturing, which already includes 64 operations across 37 states. On April 28, 2025, Thermo Fisher Scientific Inc. (NYSE:TMO) introduced an enhanced platform technology and a new CHO K-1 cell line that can reduce timelines to Investigational New Drug (IND) filing from 13 to nine months. The solution helps biotech and pharmaceutical companies overcome logistical complexities in pre-clinical biologic drug development.
The company has also taken some cost-cutting measures. On May 3, 2025, Thermo Fisher (NYSE:TMO) announced it would close its location near downtown Orlando and lay off 58 employees. The move will primarily affect researchers, nurses, and staff tied to its PPD Clinical Research Services division. On April 25, Scotiabank analyst Sung Ji Nam adjusted the price target for Thermo Fisher Scientific Inc. (NYSE:TMO) to $605 from $650. Nam wrote that although the company surpassed expectations in its first quarter results of 2025, it revised the full-year guidance. Nevertheless, Nam maintained a Sector Perform rating.
Overall, TMO ranks 5th on our list of billionaire quants’ two sigma’s stock picks with huge upside potential. While we acknowledge the potential of TMO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TMO but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.