In this piece, we will take a look at Jim Simons' stock portfolio and the top ten stock picks. If you want to skip our introduction to some fundamentals of stock trading and the legendary investor, then take a look at Jim Simons Stock Portfolio: Top 5 Stock Picks.
As should be clear after the turmoil over the past year and a half at least, the stock market is not for the faint of heart. The market performs well when the economy is performing well and there are no shocks to the global system. However, even if you've been living under the rock since 2019, you're still likely to know that the market has seen two major shocks since then which came in the form of the coronavirus pandemic and then the Russian invasion of Ukraine.
With 2023 is racing towards its end, markets are as jittery as ever. The first half of the year was a stunner as a robust U.S. economy and a wave of hype around artificial intelligence pushed battered and beaten down mega cap technology stocks to new highs. Yet, as the third quarter of 2023 ended, uncertainty was once again back on investors' minds since the broader market performance is after all based on economic health.
The latest bit of 'intrigue' in the financial world relates to the massive bond market. While the stock market is the most widely discussed market in the media, the fact is that the bond market is equally, if not more important. Bonds, for those out of the loop, are financial instruments that are issued to solicit debt. A bondholder is entitled to regular interest payments and a repayment of the principal when the loan's term is over. To facilitate liquidity, bond investors are allowed to trade these instruments with each other, and turmoil in this market also impacts the stock market.
The first week of October was the usual hide and seek between investors, economic data, and the market. After the Labor Department's jobs data for September showed that the labor market continued to add a blistering number of jobs, bets that the Federal Reserve will continue on its path of interest rate hikes grew. This naturally saw bonds that are issued at older rates drop in value, which caused their yields (the coupon payment divided by the bond's price) to spike up. However, while traditional securities generally see a sustained drop in demand when their value drops, bonds are an interesting creature. This is because if the yield becomes too high, then money actually starts flowing into the bond market since everyone loves a $100 bond that pays a $10 coupon for a 10% yield. Naturally, to flow into the bond market, money has to flow out of the stock market, and consequently, stocks drop in value.
At this point, you might be wondering why is the bond market important in a piece about the hedge fund boss Jim Simons. Well, Mr. Simons is the pioneer of an approach to stock trading that is called quantitative analysis. This approach takes a mathematical look at the market, and it seeks to employ complex mathematical formulas to use crucial metrics of share performance such as the price and the volumes traded. These techniques are also applicable to the bond market, and one subset of quantitative trading is trend trading. According to a Reuters investigation, hedge funds that look at trends for their bond buying and selling decisions were particularly well off during the latest bond market selloff. The key to their success is to figure out the price direction and the hunt for the proverbial bottom and top to allow the prudent trend hedge fund to patch on to price movement and make money.
These strategies and the bond market turmoil enabled several trend hedge funds to either make a return or reverse their losses earlier this year when the bond market tanked in the aftermath of a mini banking crisis in America. For instance, AQR Capital Management's AQR Alternative Trends Strategy fund was up by 13.1% as of September end, while Virtus Investment Partners' Virtus AlphaSimplex Managed Futures Strategy fund recovered from -10% in March to -2.5% as of early October.
So its clear that quantitative and mathematical trading has a lot of merit when it comes to making financial decisions, and if it weren't, then Mr. Simons wouldn't be worth $30.7 billion as of October 2023. If you want to learn about other rich hedge fund managers and investors, then you can take a look at 20 Highest Paid Hedge Fund Managers of All Time.
While Mr. Simons is now retired, his hedge fund still aggressively uses quantitative techniques as part of its investment approach. Today we decided to take a look at his fund's, Renaissance Technologies, top stock picks, and out of these, Meta Platforms, Inc. (NASDAQ:META), Apple Inc. (NASDAQ:AAPL), and Novo Nordisk A/S (NYSE:NVO) rank as the top three.
Jim Simons Stock Portfolio: Top 10 Stock Picks
Jim Simons of Renaissance Technologies
Our Methodology
To make our list of Jim Simons' top stock picks, we used Renaissance Technologies filings with the SEC for the second quarter of this year. The stocks with the largest dollar stakes are listed below.
Renaissance Technologies' Latest Investment: $552 million
Fortinet, Inc. (NASDAQ:FTNT) is a software company headquartered in Sunnyvale, California. It provides businesses with software and hardware products to secure their networks and infrastructure. The firm expanded its product portfolio in October by announcing new hardware switches with improved bandwidth.
By the end of this year's second quarter, 49 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Fortinet, Inc. (NASDAQ:FTNT). Out of these, the firm's biggest investor is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital since it owns 9.1 million shares that are worth $688 million.
Fortinet, Inc. (NASDAQ:FTNT) joins Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Novo Nordisk A/S (NYSE:NVO) in our list of Jim Simons' top stock picks.
Renaissance Technologies' Latest Investment: $573 million
The Hershey Company (NYSE:HSY) is an iconic American company that sells chocolates and other confectionery products. Despite the economy being in a tough spot these days, the firm has been performing well on the financial front since it has beaten analyst EPS estimates in all of its four latest quarters.
After digging through 910 hedge funds for their June quarter of 2023 investments, Insider Monkey discovered that 43 were the firm's shareholders. The Hershey Company (NYSE:HSY)'s largest hedge fund shareholder is Jim Simons' Renaissance Technologies due to its $573 million stake.
Renaissance Technologies' Latest Investment: $599 million
Gilead Sciences, Inc. (NASDAQ:GILD) is a biotechnology company that makes treatments for hepatitis, heart disease, and other ailments. It is currently gearing up to share data for a major program that is developing HIV treatments in mid October, and this might prove to be a catalyst for the share price.
Insider Monkey's Q2 2023 survey covering 910 hedge funds revealed that 56 had bought and owned Gilead Sciences, Inc. (NASDAQ:GILD)'s shares. Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital is the biggest shareholder among these since it owns $684 million worth of shares.
Renaissance Technologies' Latest Investment: $610 million
Palantir Technologies Inc. (NASDAQ:PLTR) is an American software company that provides government and intelligence agencies with the capability to consolidate large volumes of data to generate actionable insights. The nature of its products and services leaves Palantir Technologies Inc. (NASDAQ:PLTR) uniquely suited to leverage AI in its portfolio. These days, the firm is seeking to win a big contract in the U.K. for the country's government run National Health Service (NHS).
Insider Monkey took a look at 910 hedge funds for their June quarter of 2023 shareholdings and discovered that 39 were the firm's investors. Palantir Technologies Inc. (NASDAQ:PLTR)'s biggest hedge fund investor in our database is Jim Simons' Renaissance Technologies since it owns 39.7 million shares that are worth $610 million.
Renaissance Technologies' Latest Investment: $678 million
Airbnb, Inc. (NASDAQ:ABNB) is a hospitality firm that provides property owners with an application to provide their apartments and other buildings to travelers looking for accommodation for their trips. These days, the firm is facing a bit of trouble as guests have started to speak out against excessive charges by the hosts for mundane services. The complaints have led to speculation that perhaps Airbnb, Inc. (NASDAQ:ABNB) might lose some of its traveler market back to hotels.
As of June 2023, 47 out of the 910 hedge funds part of Insider Monkey had invested in Airbnb, Inc. (NASDAQ:ABNB). Out of these, the largest shareholder is Jim Simons' Renaissance Technologies due to a $678 million stake.
Meta Platforms, Inc. (NASDAQ:META), Airbnb, Inc. (NASDAQ:ABNB), Apple Inc. (NASDAQ:AAPL), and Novo Nordisk A/S (NYSE:NVO) are some of Jim Simons' top investments.
