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Jim Simons' Top Buys of the 1st Quarter

Jim Simons (Trades, Portfolio), founder of Renaissance Technologies LLC, has released his firm's portfolio for the first quarter. The top buys were Zoom Video Communications Inc. (NASDAQ:ZM), Baidu Inc. (NASDAQ:BIDU), Allergan PLC (NYSE:AGN), Bristol-Myers Squibb Co. (NYSE:BMY) and NextEra Energy Inc. (NYSE:NEE).


Renaissance Technologies LLC is a quantitative investment management company that trades in global financial markets. The company is dedicated to adhering to mathematical and statistical methods. Investments are made using a computer algorithm and trades are conducted for Simons by his firm.

The guru's portfolio, valued at $102.96 billion, gained 578 new holdings during the first quarter. Totalling at 3,402 stocks, the portfolio has seen a 17% turnover rate.

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Zoom

The largest of buy for the quarter was the addition of 2.77 million shares of Zoom, representing a 0.39% stake in the portfolio. The stock traded at an average price of $97.73 during the quarter.

The cloud based peer-to-peer communications software company provides both telephone and online chat services used primarily for teleconferencing, telecommuting and distance education. As of May 15, the stock was trading at $170.95 with a market cap of $49.09 billion.

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GuruFocus gives the company a financial strength rating of 7 out of 10. The cash-to-debt ratio of 13.2 comes in higher than 87.10% of other telecommunications companies. While an operating margin of 2.04% comes in lower than 70.63% of companies, an Altman Z-Score of 63.57 shows the company far from bankruptcy.

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Baidu

Simons' firm also saw an addition of 3.79 million shares of Baidu, representing an increase of 197.87% in the holding and a 0.37% increase in the portfolio overall. The stock traded at an average price of 86.69% per share during the quarter.

The Chinese multinational technology company focuses its efforts in internet-related services and artificial intelligence. As of May 15, shares were trading at $97.38 with a total market cap of $33.72 billion. A price-earnings ratio of 116.89 places the company 90.80% below the rest of the industry and the Peter Lynch chart shows the stock trading consistently above its intrinsic value.

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GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rank of 8 out of 10. A cash-to-debt ratio of 1.99 shows the stock lower than 60.82% of the industry and an equity-to-asset ratio of 0.54 places them lower than 63.51% of other interactive media companies. However, an operating margin of 5.74% places the company above 55.51% of the industry.

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Allergan

The addition of 2.06 million shares of Allergan represented a 41.22% increase in the holding for the first quarter. The stock traded at an average price of $166.32 per share during the quarter and constituted 0.36% weight in the portfolio.

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The Irish pharmaceutical copmany markets brand name drugs and medical devices in the areas of medical aesthetics, eye care, central nervous system and gastroenterology. Shares were trading at $193.02 on May 15 with a market cap of $63.66 billion.

The company has a forward price-earnings ratio of 11.89, coming in higher than 78.12% of other drug manufacturers. However a cash-to-debt ratio of 0.13 places them lower than 82.67% of the industry and the Peter Lynch chart suggests shares are trading above their intrinsic value.

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GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 5 out of 10 and a valuation rank of 4 out of 10. An operating margin of -2.53% places it lower than 65.39% of the industry and the company has seen a negative net income since 2017.

Bristol-Myers Squibb

Simons bought an additional 5.78 million shares of Bristol-Myers Squibb during the first quarter at an average price of $50.78 per share. This represented a small 9.6% increase in the holding compared to some of his larger purchases.

The New York-based pharaceutical company has been producing prescription pharaceuticals and biologics since its merger in 1989 with a focus on cancer and disease. Shares on May 15 were trading at $64.75 with market cap of $145.60 billion and an enterprise value of $174.88 billion. The Peter Lynch chart shows the stock trading well above its intrinsic value, suggesting that it is overvalued.

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GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rank a high 8 out of 10. The operating margin currently sits at 16.05%, which is higher than 87.09% of the industry, and the return on capital, as defined by Joel Greenblatt (Trades, Portfolio), sits at 67.8%, placing it higher than 95.69% of other drug manufacturers. However, the company currently has a cash-to-debt ratio of 0.39, ranking it lower than 68.83% of the industry due to the issuance of significant debt in December 2019.

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NextEra Energy

The fifth-largest addition to the portfolio was the addition of 1.29 million shares of NextEra Energy, a newcomer to the portfolio after being sold out of at the end of 2019. The addition totaled a 0.30% change in the portfolio with the stock trading at an average price of $138.14 per share.

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NextEra is an electric services company that employs 14,000 employees across the U.S. and Canada. The leading clean energy company can generate approximately 45,500 megawatts of energy. As of May 15, the stock was trading at $225.44 per share with a market cap of $110.55 billion. The Peter Lynch chart shows the stock overvalued and trading well above its intrinsic value.

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GuruFocus gives the company a low financial strength rating of 3 out of 10 and profitability rank of 7 out of 10. A price-earnings ratio of 31.15 places the company below 84.49% of the industry. A cash-to-debt ratio of 0.07 places the company lower than 76.16% of the industry with increased levels of debt since 2014.

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Portfolio overview

Simons' top holdings are Sprint Corp. (NYSE:S), Petrolo Brasileiro SA Petrobras (NYSE:PBR), Bristol-Myers Squibb, Kinross Gold Corp. (NYSE:KGC) and Sirius XM Holdings Inc. (NASDAQ:SIRI).

By weight, the portfolio is most heavily invested in the health care (25.37%), technology (12.42%) and communication services (9.44%) sectors.

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Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.

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This article first appeared on GuruFocus.