(Business Insider) A secretive $US120 billion hedge fund, founded by a Cold War codebreaker and maths professor, vastly outperformed Warren Buffett over the past 30 years.
Renaissance Technologies, which was created by Jim Simons, counts Chipotle and Facebook among its largest investments. It recorded an annualized, post-fee return of 39% at its flagship Medallion fund between 1988 and 2018, according to “The Man Who Solved The Market: How Jim Simons launched the Quant Revolution,” a new book by Greg Zuckerman.
The 39% gain – 66% before fees – trumps returns of about 16% at Buffett’s Berkshire Hathaway and 10% from the S&P 500 over the same period.
Medallion’s remarkable performance means a dollar invested in the fund in 1988 would have grown to about $US27,000 net of fees by the end of 2018, dwarfing a $US107 return from Berkshire Hathaway and a $US20 total return from the benchmark index.
While the Medallion fund is restricted to Renaissance employees, the hedge fund’s remarkable track record means its trading patterns are worth noting. Its 10 biggest investments, based on a SEC filing for the quarter ended 30 September, are listed below.
1. Bristol-Myers Squibb
Renaissance’s biggest holding is its $US1.66 billion stake in Bristol-Myers Squibb, a pharmaceuticals giant that makes medicines to treat cancer, HIV/AIDS, cardiovascular disease, diabetes, and other ailments.
Federal regulators approved the company’s proposed $US74 billion takeover of biotech firm Celgene this month.
2. Chipotle Mexican Grill
Renaissance has a $US1.61 billion stake in Chipotle Mexican Grill. The fast-casual Mexican restaurant chain, which has more than 2,500 outlets, has largely recovered from a series of health scares a few years ago.
3. Verisign
Simons and his team have a $US1.56 billion stake in Verisign, a network infrastructure group that operates the registry for domains including .com and .net.
4. Celgene
Renaissance has amassed a $US1.54 billion stake in Celgene, a biotech firm that develops medicines to treat cancers and inflammatory disorders. Celgene is set to be acquired by Bristol Myers-Squibb, the hedge fund’s largest holding.
5. Novo Nordisk
Novo Nordisk is a Danish pharmaceutical company that makes medicines for diabetes, hemophilia, growth disorders, obesity, and other chronic conditions.
Renaissance holds a $US1.28 billion stake in the company.
6. Palo Alto Networks
Renaissance holds a $US1.19 billion stake in Palo Alto Networks, a cybersecurity group offering firewalls, network security, cloud-based threat analysis, and other software tools to businesses.
7. Biogen
Biogen develops treatments for Parkinson’s, Alzheimer’s, multiple sclerosis, and other neurological diseases. Renaissance has $US983 million worth of Biogen shares.
8. Vertex Pharmaceuticals
Renaissance has a $US982 million stake in Vertex Pharmaceuticals, a biotech firm that makes drugs to treat cystic fibrosis, HIV, hepatitis C, cancer, and other ailments.
9. Gilead Sciences
Gilead Sciences makes antivirus drugs to treat HIV, hepatitis, influenza, and other maladies. Renaissance has a $US934 million stake in the biopharmaceuticals group.
10. Facebook
Renaissance has amassed $US880 million worth of Facebook stock. The social-media titan owns WhatsApp and Instagram as well as Oculus, which makes virtual-reality headsets.
