Every quarter, many money 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 that it's either a Madoff-like Ponzi scheme or a simply amazing hedge fund.
Renaissance's stock portfolio totaled a whopping $28.5 billion in value as of March 31, 2012, with several thousand holdings. (Concentration, thy name is not Renaissance Technologies!)
So what does Renaissance's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Rite Aid
Dangdang is seen as a Chinese version of Amazon.com, reportedly the nation's largest bookseller that's also selling plenty of other items now. But Dangdang faces more formidable competition than Amazon did as it grew, and China's near-term growth seems to be slowing. If you decide to invest in it, you should prepare for it to put growth ahead of profits for now, following the Amazon playbook.
Among hundreds of holdings in which Renaissance increased its stake was DryShips
Renaissance reduced its stake in gobs of companies, including New York Community Bancorp
Finally, Renaissance unloaded lots of companies, such as Inergy
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. 13F forms can be great places to find intriguing candidates for our portfolios.
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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Amazon.com, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com. The Motley Fool has a disclosure policy.