Jim Simons (Trades, Portfolio)´ Renaissance Technologies disclosed an equity portfolio valued at some $43.89 billion at the end of the second quarter of 2015. The equity portfolio is mainly invested in Technology (19%), Health Care (15), Consumer Discretionary (13%) %) stocks
In this article, we will look into the second top holding held at the end of Q2: Novo Nordisk A/S (NVO, Financial).
In Novo Nordisk A/S, the fund holds 14.09 million shares, down by 3% on the quarter. The value of the stake amounts to $771.4 million. However, the stock gained 2.57% in that period.
Strong growth potential
Novo Nordisk is a healthcare company that engages in the discovery, development, manufacture and marketing of pharmaceutical products worldwide. It operates in two segments, Diabetes Care and Biopharmaceuticals.
The company has been operating for more than 85 years and is expanding to reach a third of the diabetes treatment market. Diabetes will be higher in the future due to an increasingly overweight population. Having said this, we feel comfortable with this stock in the long term due to its strength and its position in the diabetes market.
The firm has shown predictable revenue and earnings growth as well as operating margin. The margin expansion is usually a good sign. Further, the company has enough cash to cover all of its debt, so we can say that the financial situation is stable. Historical EPS growth rate is about 19%, but the company is looking to grow at a rate of 26.32%, almost doubling its past performance.
CEO Lars Rebien Sorensen has executed good decisions since 2000, helping the stock outperform its peer group. The current price per share stands at $56.95, which is located nearly the 52-week high. However, Yahoo! (YHOO, Financial) Finance estimated target price is at $71.1, which represents a 25% upside potential. The trailing 12-month dividend yield stands at 1.3%, which is close to the three-year low and is ranked higher than 58% of the 238 companies in the Global Biotechnology industry.
Regarding its valuation metrics, the stock is undervalued. In terms of valuation, the stock sells at a trailing P/E of 31.10x, trading at a discount compared to a median of 33.2x for the industry. To use another metric, its price-to-book ratio of 24.63x is above the median while the P/S ratio of 9.80x is below the industry median of 10.78x.
Other hedge fund
The second-largest shareholder of the company is Ken Fisher (Trades, Portfolio), with 12.29 million shares, valued at $673.3 billion, held as of the end of the Q2 2015. Fisher has also decreased the position by 3%.
Disclosure: As of this writing, Omar Venerio did not hold a position in any of the aforementioned stocks
