Jim Simons (Trades, Portfolio)’ Renaissance Technologies recently disclosed its 13F portfolio updates for the fourth quarter of 2022, which ended on Dec. 31.
Founded by Simons in 1982, Renaissance Technologies has successfully employed complex mathematical models to analyze and execute trades, many of which are automated. The company’s computer-based models predict price changes in easily traded financial instruments, and these models have been so successful that they have made Renaissance one of the top-performing hedge funds in the U.S. While the funds have long been closed to outside investors, we can still get a glimpse of which equities the firm has been buying and selling via its 13F reports.
According to its latest filing, the firm’s top three trades for the quarter were the sale of its Advanced Micro Devices Inc. (AMD, Financial) stake and reductions in its Nvidia Corp. (NVDA, Financial) and Adobe Inc. (ADBE, Financial) positions. Rounding out the top five trades, the firm made additions to its Roblox Corp. (RBLX, Financial) and JPMorgan Chase & Co. (JPM, Financial) holdings.
Advanced Micro Devices
Renaissance sold out of its 6,857,326-share stake in Advanced Micro Devices (AMD, Financial), which used to take up 0.91% of the equity portfolio. During the quarter, the stock traded for an average of $135.45 per share.
Advanced Micro Devices is a semiconductor company headquartered in Santa Clara, California. It develops computer processors and related technologies and also produces flash memories, graphics processors, motherboard chip sets and other components used in consumer electronics goods.
On Feb. 22, shares of Advanced Micro Devices traded around $115.97 for a market cap of $187.36 billion. According to the GF Value Line, the stock is modestly undervalued.
The company has a financial strength rating of 8 out of 10 and a profitability rating of 6 out of 10. GuruFocus has issued warning signs for assets growing faster than revenue and insider selling. Positive signs include a three-year revenue per share growth rate of 30% and a three-year Ebitda per share growth rate of 79.7%.
Nvidia
The firm reduced its Nvidia (NVDA, Financial) holding by 88.6% for a remaining investment of 390,872 shares, reducing the equity portfolio by 0.82% at the quarter’s average share price of $277.31.
Nvidia is a Santa Clara, California-based technology company that designs graphics processing units and system on a chip units. It has a strong presence in the mobile computing and automotive markets and is a leader in artificial intelligence and internet of things innovations.
On Feb. 22, shares of Nvidia traded around $238.40 for a market cap of $590.69 billion. According to the GF Value Line, the stock is fairly valued.
The company has a financial strength rating of 7 out of 10 and a profitability rating of 9 out of 10. Warning signs include assets growing faster than revenue and a Beneish M-Score that implies possible manipulation of financial results, while positive signs include growing operating and net margins that are outperforming more than 95% of industry peers.
Adobe
The firm also cut 92.76% of its Adobe (ADBE, Financial) investment, leaving a remaining stake worth 74,633 shares and shaving 0.71% off the equity portfolio. Shares changed hands for an average of $625.62 apiece during the quarter.
Adobe is a San Jose, California-based computer software company that offers a suite of creative design-focused software products for photo editing, vector graphic illustration, website design, video editing, 3-D modelling and social media.
On Feb. 22, shares of Adobe traded around $444.76 for a market cap of $208.28 billion. According to the GF Value Line, the stock is modestly undervalued.
The company has a financial strength rating of 7 out of 10 and a profitability rating of 8 out of 10. The GuruFocus system does not find any warning signs for the company. Positive signs include growing top and bottom lines and a return on invested capital that is typically higher than the weighted average cost of capital.
Roblox
The firm made a dramatic increase of 131,594.9% to its Roblox (RBLX, Financial) stake, ending the quarter with 5,399,491 shares and adding 0.69% to the equity portfolio. During the quarter, the average share price was $97.97.
Roblox’s namesake video game is available on phones, tablets and consoles. The game, which is free to download, provides a customizable virtual universe where players create their own avatars and environments. The company generates revenue from the sale of its in-game currency, Robux.
On Feb. 22, shares of Roblox traded around $48.60 for a market cap of $28.48 billion. Since it went public in March 2021, shares are down 30%.
The company has a financial strength rating of 4 out of 10 and a profitability rating of 1 out of 10. The balance sheet is stable with a cash-debt ratio of 2.54 and a Piotroski F-Score of 5 out of 9. The company is not yet profitable, as shown by the negative operating and net margins.
JPMorgan Chase
Renaissance made a 1,543.74% increase in its JPMorgan Chase (JPM, Financial) holding for a total of 3,341,486 shares, adding 0.62% to the equity portfolio. Shares changed hands for around $164.11 each during the quarter.
With $3.1 trillion in assets under management, JPMorgan is the largest bank in the U.S. and the sixth-largest bank in the world. Based in New York, the investment banking company offers a full range of traditional and investment banking services to individual and corporate clients worldwide.
On Feb. 22, shares of JPMorgan traded around $151.87 for a market cap of $447.12 billion. According to the GF Value Line, the stock is fairly valued.
The company has a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. Warning signs include an equity-to-asset ratio and a debt-to-equity ratio that are worse than 77% of industry peers. On the positive side, the bank’s return on equity and return on assets are better than 72% of other companies in the banks industry.
Portfolio overview
Renaissance Technologies’ latest 13F report shows 3,861 stocks in the equity portfolio valued at a total of $80.38 billion. The turnover for the period was 25%.
The top holding in the portfolio was Novo Nordisk A/S (NVO, Financial) with 2.66% of the equity portfolio, followed by Atlassian Corp. PLC (TEAM, Financial) with 1.38% and VeriSign Inc. (VRSN, Financial) with 1.31%.
In terms of sector weighting, the firm was most invested in the health care, technology and consumer defensive sectors.
