Every quarter, fund managers have to disclose what they've bought and sold. Their latest moves can shine a bright light on smart stock picks.
Today let's look at the Renaissance Technologies hedge fund company founded by James Simons, and known for its quantitative approach to investing. Indeed, Simons explained in 2007 that, "We hire physicists, mathematicians, astronomers and computer scientists and they typically know nothing about finance... We haven't hired out of Wall Street at all." The company's most well-known fund is the Medallion Fund. Interestingly, most of the company's assets belong to employees of the firm, and outside investors are generally turned away.
Why should you look at Renaissance Technologies' moves? Well, it's hard to find performance data for it, but in his 2009 book Blunder: Why Smart People Make Bad Decisions, Zachary Shore noted that Renaissance's flagship Medallion fund "has yielded an average 38% annual return since its inception in 1988. The fund has lost money only in a single year, 1989, when it dropped 4.1%." That's so remarkable that some have mused jokingly that it's either a Madoff-like Ponzi scheme, or a simply amazing hedge fund.
Renaissance's stock portfolio totaled a whopping $24.6 billion in value as of Dec. 31, 2011, with 2,758 holdings. (Concentration, thy name is not Renaissance Technologies!)
So what does Renaissance Technologies' latest quarterly 13F filing tell us? Here are a few interesting details:
Among many new holdings are Broadcom
Two companies seeing their shares held by Renaissance shrink are Philip Morris International
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and to that end 13-F forms can be great places to find intriguing candidates for our portfolios.
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