Jim Simons Purchases Amazon, Facebook in First Quarter

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May 19, 2015
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Jim Simons (Trades, Portfolio) founded his hedge fund Renaissance Technologies in 1982, which today manages more than $20 billion in assets.

The firm employs complex mathematical models to analyze and execute trades, and is known for hiring people with non-financial backgrounds such as statisticians, physicists, and mathematicians.

During the first quarter, Simons added 637 new stocks to the portfolio, which now contains 3,133 stocks. Three of the top five new buys were technology companies, which is the sector that houses 15.6% of the firm’s assets.

Amazon.com Inc (AMZN, Financial)

Simons purchased 1,152,855 shares of Amazon for an average price of $351.66 per share. The stock has a 0.91% portfolio weighting. The graph below shows Simon’s historical holding in the company.

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Amazon’s stock increased 44% over the past year and now trades at $422.87, with a forward P/E ratio of 88.5 and P/S ratio of 2.15.

GuruFocus rates Amazon’s business predictability as a perfect 5 stars. Over the past five years, revenue growth was 28.4%; however, EBIT declined by 28.2% over the same time period.

In 2014, the company reported net income of $-241 million, down from $274 million the year before.

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Facebook (FB, Financial)

Simons purchased 2,646,695 shares of Facebook, which traded at an average price of $78.34 during the quarter. The social media site now has a 0.46% portfolio weighting.

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Over the past year, the stock increased 37%, and now trades at $81.24. The P/E ratio is 78.5 and the P/S ratio is 16.2.

In 2014, Facebook’s net income was $2,940 million, up from $1,500 million the year before. The balance sheet is healthy with a comfortable current ratio. In addition, Facebook has been gradually paying down its long-term debt.

Union Pacific Corp (UNP, Financial)

Simons bought 1,947,332 shares of railroad company Union Pacific at an average price of $117.35 per share.

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Union Pacific is currently priced at $103.37 with a P/E ratio of 17.7, and P/S ratio of 3.8. The company’s business predictability is rated as 4.5 out of 5 stars. The DCF calculator estimates the stock is undervalued with a margin of safety of 38%. The fair value according to the calculator is $167.11.

Over the past five years, revenue growth was 13.1%, while EBIT grew by 22%. The current dividend yield is 1.93%, which is close to the five-year high, and the payout ratio is 34%.

Priceline Group (PCLN, Financial)

Simons picked up 135,199 shares of Priceline for an average price of $1,118.85 per share, which now accounts for 0.34% of the portfolio.

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Priceline’s stock has increased 5% over the past year, and now trades at $1,216.35 with a P/E ratio of 26.5 and P/S ratio of 7.5. Over the past five years, the revenue growth rate was 27.7%, while EBIT grew by 43.3% over the same time period.

In 2014, Priceline reported net income of $2,422 million, an increase from $1,893 million the year before.

GuruFocus rates the company’s business predictability as 4.5 out of 5 stars. The DCF calculator estimates a fair value of $1,304.13, which gives a 7% margin of safety.

Wal-Mart Stores (WMT, Financial)

Simons’ fifth-largest purchase during the quarter was 1,627,400 shares in Walmart for an average price of $85.11 per share. The following graph shows his holding history.

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The stock is currently priced at $76.82 with a P/E ratio of 15.8 and P/S ratio of 0.53. The revenue growth rate over the past five years was 7.5%, while EBIT grew by 6.1%.

In 2014, the company’s operating margin was 5.59%. This has largely remained steady over the years as show in the graph below. The margin is higher than the retail defensive industry median of 3.3.

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View Jim Simons (Trades, Portfolio)’ latest stock picks here. Not a Premium Member of GuruFocus? Try it free for 7 days.