In this article, we discuss 10 stocks that Jim Simons’ quant hedge fund is selling. If you want to skip our detailed analysis of these stocks, go directly to Jim Simons’ Quant Hedge Fund Is Selling These 5 Stocks.
Jim Simons is an American billionaire investor and hedge fund manager, who in 1978 founded Renaissance Technologies, a New York-based quantitative hedge fund with a Q3 13F portfolio worth $77.4 billion. Simons retired on January 1, 2010 as the hedge fund manager and chief executive officer, but remains at Renaissance Technologies as a non-executive chairman.
Jim Simons attended the Massachusetts Institute of Technology, graduating with a Bachelor’s degree in 1958, and completed a PhD in mathematics from the University of California, Berkeley. Renaissance Technologies runs two flagship funds, namely the Medallion Fund and Renaissance Institutional Equities Fund. The Medallion Fund gained approximately 76% during 2020, and is one of the leading funds maintained by Renaissance Technologies.
Investments at Renaissance Technologies are focused on the information technology, healthcare, finance, consumer staples, consumer discretionary, and communications sectors. The hedge fund held over 4000 stocks, the most notable of which were Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), and Zoom Video Communications, Inc. (NASDAQ:ZM).
Jim Simons of Renaissance Technologies
Using the Q3 2021 portfolio of Renaissance Technologies for this analysis, we selected the stocks that the hedge fund sold out of during the period. We have ranked the securities according to the hedge fund sentiment around each holding.
Jim Simons’ Quant Hedge Fund Is Selling These Stocks
10. Aramark (NYSE:ARMK)
Number of Hedge Fund Holders: 29
Based in Philadelphia, Aramark (NYSE:ARMK) is a company providing food, facilities, and uniform services to multiple industries including education, healthcare, and sports. First investing in Aramark (NYSE:ARMK) back in Q4 2014, Renaissance Technologies disposed of its $8.5 million stake in Aramark (NYSE:ARMK) heading into Q3 2021.
On February 8, Aramark (NYSE:ARMK) reported earnings for the fourth quarter. The company posted an EPS of $0.22, in line with analysts’ consensus estimates. Revenue over the period gained almost 44% year-over-year, reaching $3.95 billion, exceeding estimates by $157.95 million.
Baird analyst Andrew Wittmann noted that analyst day targets shared by Aramark (NYSE:ARMK) imply about a 20% EPS compound annual growth rate from FY22-FY25, which he said “raises the growth bar”. The analyst stated that his estimates are below the company’s targets “at this time”, and argues that increasing investor confidence in the targets will be key to stock outperformance and multiple expansion. He kept a Neutral rating and a $40 price target on Aramark (NYSE:ARMK) shares on December 9.
Aramark (NYSE:ARMK) declared on February 2 a $0.11 per share quarterly dividend, in line with previous. The dividend is payable on March 2, to shareholders of record on February 16.
Among the hedge funds monitored by Insider Monkey, 29 funds were long Aramark (NYSE:ARMK) in Q3 2021, down from 36 funds in the quarter earlier. Thomas Steyer’s Farallon Capital owned a position in Aramark (NYSE:ARMK) worth roughly $602 million, and is the biggest stakeholder of the company as of the third quarter.
In addition to Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), and Zoom Video Communications, Inc. (NASDAQ:ZM), hedge funds are taking an interest in Aramark (NYSE:ARMK).
9. Ingersoll Rand Inc. (NYSE:IR)
Number of Hedge Fund Holders: 33
Ingersoll Rand Inc. (NYSE:IR) is a multinational company based in North Carolina, providing complex air, fluid, energy, specialty vehicle, and medical technologies. Renaissance Technologies owned 345,996 Ingersoll Rand Inc. (NYSE:IR) shares, worth $16.8 million in Q2 2021, which the hedge fund discarded in the third quarter of 2021.
On January 20, Baird analyst Michael Halloran lowered the price target on Ingersoll Rand Inc. (NYSE:IR) to $64 from $68 and kept an Outperform rating on the shares. The analyst observed that there is a significant internal transformation underway and an underappreciated growth profile, with significant margin levers and an opportunity for capital deployment which will strengthen the portfolio further.
Ingersoll Rand Inc. (NYSE:IR) declared on October 26 a $0.02 per share quarterly dividend, in line with previous. The dividend was paid on December 17, to shareholders of record on November 10.
In the third quarter of 2021, 33 hedge funds were bullish on Ingersoll Rand Inc. (NYSE:IR), with stakes amounting to $732.8 million, up from 31 funds in the quarter earlier, holding stakes in Ingersoll Rand Inc. (NYSE:IR) worth $873.4 million. Billionaire Andreas Halvorsen’s Viking Global held the largest Ingersoll Rand Inc. (NYSE:IR) stake in Q3 2021, with 3.6 million shares worth $183.5 million.
Here is what Artisan Global Discovery Fund has to say about Ingersoll Rand Inc. (NYSE:IR) in its Q3 2021 investor letter:
“We also added to Ingersoll Rand. Ingersoll Rand is a global market leader with a broad range of mission-critical flow creation technologies (pumps, compressors, etc.) for industrial and medical applications. Over the past several years, a new management team has repositioned the company toward less cyclical, more profitable businesses, which are supported by a stronger culture of employee engagement and continuous improvement. More recently, the company’s top-line growth has accelerated as the pandemic fades, and margins are benefiting from cost synergies achieved in its merger integration with Gardner Denver (with further runway ahead). This has boosted cash flows and enabled management to resume its successful bolt-on acquisition strategy, acquiring Seepex GmbH, a global leader in positive displacement pumps for end markets such as water, wastewater, food and beverage and chemicals, in Q2. With an increasingly visible organic and acquisition-driven growth capability, characteristics the market appears to be undervaluing, we added to our position at an attractive discount to our PMV estimate.”
8. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 41
International Business Machines Corporation (NYSE:IBM) is an American technology conglomerate with operations worldwide. Jim Simons’ fund started building its position in International Business Machines Corporation (NYSE:IBM) back in Q3 2011, and by the second quarter of 2021, Renaissance Technologies held a $63 million position in the company, which was discarded completely in Q3 2021.
On January 24, International Business Machines Corporation (NYSE:IBM) reported earnings for the fourth quarter. The company posted an EPS of $3.35, beating estimates by $0.06. Revenue over the period dropped 18.03% year-on-year to $16.70 billion, but outperformed estimates by $730.50 million.
Tigress Financial analyst Ivan Feinseth on January 28 reiterated a Neutral rating on International Business Machines Corporation (NYSE:IBM) and initiated a price target of $133. According to the analyst, “intense” competition and a lack of major growth catalysts provide little opportunity for significant near-term share gains. However, International Business Machines Corporation (NYSE:IBM) “looks close to turning a corner, having reported the best sales growth in 10 years on strong cloud demand”.
International Business Machines Corporation (NYSE:IBM) declared on February 1 a $1.64 per share quarterly dividend, in line with previous. The dividend is payable on March 10, to shareholders of record on February 11.
Among the hedge funds tracked by Insider Monkey, 41 hedge funds were long International Business Machines Corporation (NYSE:IBM) in the third quarter of 2021, with stakes totaling $1.40 billion. Arrowstreet Capital held the largest stake in the company as of Q3 2021, with 2.8 million shares worth $398 million.
Here is what St. James Investment Company has to say about International Business Machines Corporation (NYSE:IBM) in its Q4 2021 investor letter:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
7. General Electric Company (NYSE:GE)
Number of Hedge Fund Holders: 53
General Electric Company (NYSE:GE) is an American industrial multinational conglomerate operating in the aviation, power, renewable energy, and digital sectors. Renaissance Technologies started building its position in General Electric Company (NYSE:GE) in Q1 2011, and over time, the hedge fund sold out of its stake a few times. By Q2 2021, the fund owned a $29.5 million position in General Electric Company (NYSE:GE), which it disposed of in the third quarter.
General Electric Company (NYSE:GE) on February 11 declared a $0.08 per share quarterly dividend, in line with previous. The dividend is payable on April 25, to shareholders of record on March 8.
Publishing its Q4 results on January 25, General Electric Company (NYSE:GE) posted earnings per share of $0.92, beating estimates by $0.03. The $20.30 billion revenue dropped 7.41% year-on-year, missing estimates by $1 billion.
Barclays analyst Julian Mitchell on January 27 lowered the price target on General Electric Company (NYSE:GE) to $116 from $122 and kept an Overweight rating on the shares. The analyst’s estimates are largely unchanged after the Q4 results and he lowered the target to reflect peer multiples.
In the third quarter of 2021, 53 hedge funds were long General Electric Company (NYSE:GE), down from 67 funds in the quarter earlier. Eagle Capital Management held a prominent stake in General Electric Company (NYSE:GE) as of Q3 2021, with 13.6 million shares worth $1.40 billion.
“During the quarter, we sold our positions in General Electric Co. General Electric is a company we followed for a long time. In the past, we removed GE from the MVP list due to management’s poor capital allocation decisions which resulted in value instability. Larry Culp, the former CEO of Danaher, became CEO of General Electric in 2018. The company implemented a vast restructuring program to simplify the industrial side of its business, sold off non-core assets, paid down debt with the proceeds, and drastically shrunk GE Capital. These restructuring activities allowed its world-class jet engine and healthcare businesses to shine through, and improved value stability. As a result, we added the company back to the MVP list. While the pandemic negatively impacted General Electric’s aviation business in the short run, it also gave us the opportunity to buy General Electric in the second quarter of 2020 with a substantial margin of safety. GE is a good example of a competitively entrenched, yet slower growing MVP business. As its stock price rose rapidly over the last year, its value growth did not keep up, and the price to value gap closed quickly. As our margin of safety diminished, we sold our position in GE and allocated it to more discounted companies.”
6. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 94
Thermo Fisher Scientific Inc. (NYSE:TMO) offers analytical instruments, specialty diagnostics, and laboratory products and services to the biotechnology, pharmaceutical, and healthcare industries worldwide. In Q3 2021, Renaissance Technologies chose to drop its $31 million stake in Thermo Fisher Scientific Inc. (NYSE:TMO) entirely.
In its Q4 earnings report published on February 2, Thermo Fisher Scientific Inc. (NYSE:TMO) posted an EPS of $6.54, exceeding estimates by $1.27. The company’s revenue for the quarter came in at $10.70 billion, outperforming estimates by $1.45 billion.
On November 4, Thermo Fisher Scientific Inc. (NYSE:TMO) declared a quarterly dividend of $0.26 per share, in line with previous. The dividend was paid on January 14, to shareholders of record on December 15.
Wells Fargo analyst Dan Leonard lowered the price target on Thermo Fisher Scientific Inc. (NYSE:TMO) to $605 from $700 since he believes post-pandemic expectations are too high. He kept an Equal Weight rating on the shares on February 3.
Of the 94 hedge funds that were bullish on Thermo Fisher Scientific Inc. (NYSE:TMO) in Q3 2021, Fisher Asset Management was the leading stakeholder of the company, with more than 2 million shares worth $1.14 billion.
Renaissance Technologies discarded its Thermo Fisher Scientific Inc. (NYSE:TMO) stake, but the fund held significant positions in Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), and Zoom Video Communications, Inc. (NASDAQ:ZM) during the third quarter.
“Included in these adjustments, in early July 2021, we divested our remaining small investment in Thermo Fisher Scientific (Thermo Fisher), the world leader in the provision of equipment, consumables, and services to the Life Sciences industry. Thermo Fisher has benefited from elevated demand for its products and services associated with COVID-19 and we sold our residual investment at a gain of more than 70% compared to our average investment cost. Thermo Fisher subsequently held an Investor Day and positively surprised many people, including us, with very strong medium-term growth targets, notwithstanding a headwind from normalization of COVID-19-related business. Thermo Fisher is a high-quality business and remains on our ‘Bench’ for potential reinvestment.”
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Disclosure: None. Jim Simons’ Quant Hedge Fund Is Selling These 10 Stocks is originally published on Insider Monkey.