Monday, May 23, 2011

Renaissance Technologies Top 5 Holdings

Renaissance Technologies may not be among the best hedge funds, but it is one of the most successful. The opaque operation is headed by former government code breaker and professor James Simon. The company's flagship Medallion Fund engages in multi-asset strategies and mainly invests employee capital. Renaissance has developed other equity-based strategies that are open to institutional investors. As of the most recent filings, the hedge fund reported $24.856 billion in long equity positions.

1. Johnson & Johnson (JNJ) is the fund's largest holding. The multinational conglomerate is among the many blue chip companies that have lagged behind the rest of the market during the recent rally from 2009 lows. While this stock may seem unusual for a sophisticated quant hedge fund like Renaissance, it may make sense upon further consideration. While quant funds do indeed rely on complicated math and statistics models, one of the most persistent alpha factors is value. Johnson & Johnson has a trailing P/E of 14.90 and a forward P/E of 12.50, despite enviable profit margins, a global reach and pricing power; JNJ is clearly a value stock. Johnson & Johnson's recent stock price weakness is partially justified by the company's headline risks caused by its growing drug recalls, but these problems should prove transitory because of the strong brand value of JNJ's products. Long term investors would likely benefit from following Renaissance's lead. As of March 31, 2011, Renaissance had a current position of 6,693,200 shares, adding 1,157,308 shares in the three months since the end of 2010.

2. Lorillard Inc (LO) manufacturers and sells cigarettes in the U.S. under brands such as Newport, Kent, Maverick and Old Gold. The company has struggled along with much of the rest of the industry as it weathers the regulatory pressures that will continue to dog cigarette manufacturers. However, the company's stock has recently exhibited considerable strength after Lorillard avoided additional regulation from the Food and Drug Administration which could have pressured sales of its trademark menthol cigarettes. Even after the rally, the company is not necessarily expensive. It has a trailing P/E of 16.63 and a forward P/E of 13.8, and this for a company with profit margins of 25% and return on assets of 36.2%. The company will continue to face secular pressures. However, there are also structural advantages, because a fair portion of the investing community refuses to consider "sin" stocks. Ren Tech currently has a position of 2,702,500 shares but sold 1,682,900 shares last quarter. This sale would have coincided with the recent price strength.

3. Inc (PCLN) is one of the market's hottest stocks. Simons' substantial stake in the online travel company is an interesting juxtaposition against his stake in Johnson & Johnson. It truly illustrates Ren Tech's intellectual flexibility. While JNJ is a classic value stock, Priceline is a growth/momentum stock. It is rare to find both stocks in the same portfolio.

Since 2006, Priceline's revenues have tripled to $3.08 billion. While the company trades at a pricey 19.9x forward P/E, the company's gross margins have actually increased over the years; from an already impressive 35% to more than 60% in 2010. Investors may look at the high stock price and rich valuations and assume that the company is overpriced, but they would be wise to take a closer look. Renaissance reported a position of 490,399 shares, an increase of 248,000 shares last quarter.

4. The Coca-Cola Company (KO) is another blue chip stock that may surprise market watchers, but Renaissance has already shown that it defies simple categorization. The beverage company continues to dominate the market both domestically and internationally. As the world's per capita income continues to grow, Coca-Cola could be one of the biggest beneficiaries. Coca-Cola estimates that of the 55 billion servings of beverages consumed everyday, Coca-Cola trademarked products represent only 1.7 billion of those servings. Management continues to believe that there is substantial upside. Renaissance may agree. The fund currently owns 3,459,900 shares, after adding 1,212,600 shares last quarter.

5. Eli Lilly & Co (LLY) is an international pharmaceutical giant. Like other companies in the industry, Eli Lilly's valuation multiple has suffered from fears of growing competition from generic manufacturers. These fears are not unfounded. In October 2011, Zyprexa, which represents 22% of 2010 revenues for Eli Lilly, will lose U.S. exclusivity. In addition, there is uncertainty over the giant's own drug pipeline. Despite the concerns, the company's revenues have risen over the last few years. The company has a trailing P/E of 8.74 and a forward P/E of 10.33. The fund has a current position of 6,479,805 shares after adding 3,948,300 shares last quarter.

Monday, March 7, 2011

Dividend Aristocrats

The S&P 500 Dividend Aristocrats is the most prestigious list of dividend stocks. The Dividend Aristocrats index is designed to measure the performance of S&P 500 constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years.

Among others, Dividend Aristocrats include these highly recognizable names, with years of consecutive dividend increases shown:
- 3M Co. (MMM) – 52 years
- Abbott Laboratories (ABT) – 38 years
- Clorox Co (CLX) – 35 years
- Coca-Cola Co (KO) – 48 years
- Exxon (XOM) – 28 years
- Johnson & Johnson (JNJ) – 48 years
- McDonald’s Corp (MCD) – 34 years
- Procter & Gamble (PG) – 54 years
- Wal-Mart Stores (WMT) – 36 years

Friday, February 25, 2011

investing principles

i am holding only solid good regular dividends paying stocks
preferbly forever.

i am trading on those same stocks with the saftey of not needing
to close a position that goes against me

keep it simple


I have been an active investor for the last 3 years
and i wanted to share my movments on the internet
so here goes...