20 Oct

Renaissance Technologies: Top Investments

WRITTEN BY Rabindra Samanta

James Simons founded his firm Renaissance Technologies (RIEF) (RIDA) in 1982 in New York. The billionaire hedge fund manager is well-known in the industry because of his quantitative investment strategies. Also, the firm is a private hedge fund firm. His total expected net worth is $21.6 billion as of October 19, according to Forbes.

Renaissance Technologies: Top Investments

Healthcare sector is seen as a defensive

One way to learn about Renaissance Technologies’ assets is to look at their SEC Form 13F, a quarterly report from investment managers with at least $100 million in equity assets. Renaissance Technologies had a strong investment in the healthcare sector in Q2 2019. The healthcare sector makes up 18.16% of the firm’s total portfolio in the same quarter.

The healthcare sector generally performs the role of a defensive sector in the economy. When any economic turmoil arises in the country, investors turn towards the defensive sector. Defensives protect their portfolio from downside risk.

However, because of next year’s presidential election, investors are seeing a high risk in this sector. RBC’s Lori Calvasina had observed this fact in her interview with CNBC on October 8. However, if Trump is reelected, healthcare stocks might outperform. Also, it might boost Renaissance Technologies’ and other firms’ performance based on current holdings.

Sector-wise holdings

The demand for the health care sector remains strong even if the economic activity slows down. However, specific health care companies face some risks. This is because of their business model. The Health Care Select Sector SPDR ETF (XLV) tracks the performance of the health care sector. It returned 6.1% on a year-to-date basis as of October 18. But, the broader market S&P 500 Index returned 19.1% in this period.

The information technologies sector is the second largest sector in the firm’s portfolio. This sector makes up 13.5% of its portfolio. The financial sector is the third-largest sector. It makes up 11.53% of the firm’s portfolio. Overall, the Renaissance Technologies portfolio is balanced between cyclical and defensive stocks. But, other top hedge fund managers like Warren Buffett and Kenneth Fisher usually prefer cyclical stocks. At the same time, Nelson Peltz’s Trian Fund has invested the majority of the corpus in the consumer staple sector. 

Renaissance Technologies’ top five holdings

The top five holdings of Renaissance Technologies are VeriSign Inc. (VRSN), Chipotle Mexican Grill Inc. (CMG), and Novo Nordisk A/S (NVO). Palo Alto Networks Inc. (PANW) and Vertex Pharmaceuticals Inc. (VRTX) are also in the top five. These holdings represents 1.41%, 1.15%, 1.01%, 0.91%, and 0.89% of the firm’s portfolio, respectively, in Q2 2019.

The firm is holding nearly 22.5 million shares of the healthcare giant Novo Nordisk A/S. It was the first largest institutional investor in this stock in Q2 2019. Kenneth Fisher’s Fisher Asset Management is the third-largest institutional holder of this stock.

Similarly, the firm is holding nearly 20.6 million shares of another healthcare company Bristol-Myers Squibb Company (BMY) in Q2 2019. Renaissance Technologies became the 13th largest institutional investor in this stock, according to the 13F filing report. The top five buying of the firm in Q2 2019 were Apple (AAPL), General Electric Company (GE), and Celgene Corp. (CELG). Also, Johnson & Johnson (JNJ) and Walmart Inc. (WMT) were also in the top five. The firm added its holdings in these stocks by 0.40%, 0.35%, 0.31%, 0.30%, and 0.30%, respectively, in Q2 2019.

Renaissance Technologies’ top sells

Apple is the top holdings of Berkshire Hathaway. Moreover, in August Stanley Druckenmiller bought General Electric shares. Druckenmiller is confident about a turnaround in General Electric business. Also, GE’s long-time holder Nelson Peltz expressed confidence about the current leadership.

The top sells of Renaissance Technologies in the second quarter were UnitedHealth Group (UNH) and Costco Wholesale Corp. (COST). Also, Lowe’s Companies Inc. (LOW), Chevron Corp. (CVX), and Activision Blizzard Inc. (ATVI) were at the top, too. The firm lowered its holdings in these stocks by 0.27%, 0.25%, 0.24%, 0.20%, and 0.19, respectively. 

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