How do you become one of the wealthiest people on earth? Ask Jim Simons, a once National Security Agency (NSA) Cold War code-cracker who went on to use groundbreaking quantitative trading strategy to found his hedge fund Renaissance Technologies in 1982.
This billionaire ranks at the top of the ladder when it comes to tactful investing, having launched the Medallion fund just six years following the inception of Renaissance. A now highly esteemed and portfolio, the Medallion fund has garnered the most profits for Simons thanks to a one-two punch of Leonard Baum’s mathematics and James Ax’s algebraic insights. This kind of numerical-minded thinking that Simons practiced back in the NSA helps him now to pinpoint what stocks are worth the investment- and which ones need to be catapulted.
The hedge fund billionaire credits his start to “pure luck-” yet he turned that luck into mathematical structuring, the same kind of strategy that helped him succeed at the Institute for Defense Analyses (IDA). Now, Simons leads a hedge fund valued at $71,565,957,000, a firm famed for its bevy of mathematicians, astronomers, along with physicists alike who use algorithms to adeptly manage large transactions.
Having carved a reputation as the sole hedge fund guru to be on all 15 yearly lists for Institutional Investor’s List of best-earning hedge fund managers across the globe, and scoring an elite 2nd place spot just last year, what does Simons calculate as smart first quarter plays in tech kings like Tesla Inc (NASDAQ:TSLA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Amazon.com, Inc. (NASDAQ:AMZN)? Let’s dive in:
Tesla is skyrocketing to fresh peaks past $330 per share and all roads to a resurgence in investor confidence point to the mass-market Model 3. Renaissance Technologies sees room for promise for Tesla, boosting its stake in the electric car giant for the first quarter of the year up 118% to 677,792 shares worth $188,630k.
Apple co-founder Steve Wozniak backs Jim Simons’ rise in conviction, having recently told Bloomberg that this electric car giant is worth the gamble. For Wozniak, Tesla’s success rests in CEO Elon Musk’s innovative hands, praising his out-of-the-box thinking for designing a car that was less about engineering logic and more about creating an idea where beauty, elegance, and luxury are centerfold to an auto experience.
The giant has certainly faced its fair share of volatility, rocketing to new share heights in April, with company valuation outclassing the likes of rivals GM’s as well as Ford’s- only to suffer a downgrade from Morgan Stanley, causing shares to rattle back down.
What is the root of Morgan Stanley’s chief concern that elicited a stark step left to the sidelines? Answer: a model solely resting on expectations for Model 3 deliveries and a forecast anticipating practically none this year.
So why the sudden change in sentiment where Tesla momentum is once again making an exciting comeback? Musk seems to be retorting to Morgan Stanley, as Tesla has maintained its goals to kickstart Model 3 production once July hits, with the objective to attain 5,000 weekly units by the close of 2017.
As everyone waits with bated breath to see what the Model 3 will have in store for auto enthusiasts, Musk’s brainchild keeps building his army of Model 3 release candidates, with the number 67 thrown out as the pinnacle to date. Tesla ordered a shipment of quite a lot of robots for production lines behind its mass-market electric vehicle launch, and all investors are bracing to see if production deliveries can match Musk’s ambitious expectations.
Overall, the Street seems to still be hesitant until Model 3 production can break Morgan Stanley’s fears, and do not share Simons’ dose of new confidence just yet. TipRanks analytics exhibit TSLA as a Hold. Out of 18 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 7 remain sidelined, and 6 are bearish on the stock. With a loss potential of nearly 19%, the stock’s consensus target price stands at $272.57.
Advanced Micro Devices, Inc.
AMD’s analyst day meeting just two weeks prior sure has shattered some investor enthusiasm, with shares diving roughly 14%. Wall Street is making its disappointment heard loud and clear that AMD failed to give life to the rumor mill’s hopes for an alliance with Intel. Key competitor NVDA’s GPU contract with Intel ended in March, and the hopes were that AMD was seizing the opportunity.
Simons also eyes reason to be cautious on this chip giant, reducing his hedge fund’s holding in AMD by 31% down to 8,023,026 shares worth $116,735k. Joining the flood of caution is also Loup Capital, who has downgraded AMD from Buy to Hold, picking apart whether the company’s business model can stand the test of time. Moreover, regarding the Intel buzz, Loup Capital is not surprised no deal was confirmed, believing that it is not in Intel’s interest. Therefore, the firm doubts a collaboration will transpire. Analysts keep coming out of the woodwork to underscore a stance of hedging bets on the chip giant for now.
Yet, loyal AMD shareholders will argue that between the giant’s serve to Intel’s Core iX series at half the cost a.k.a. Ryzen and a soon to be launched Vega graphics processing unit that takes NVDA to bat in the GPU arena, it is way too early to give up on the stock. It is worthy of note that this is the same stock that did see an over 400% escalation in share price in just a year’s time.
Ultimately, there is an unanswered query as to whether this giant can stage the rebound it needs to win the Street over once again. TipRanks analytics show AMD as a Hold. Based on 18 analysts polled by TipRanks in the last 3 months, 6 rate a Buy on AMD stock, 9 maintain a Hold, while 3 issue a Sell. The 12-month average price target stands at $11.70, marking a 5% upside from where the stock is currently trading.
Could Amazon be the first to hit a trillion-dollar market cap amongst the large-cap universe? The online auction and e-commerce leader certainly has caught Renaissance’s attention, with Simons initiating 329,255 shares in the company worth $2911,898k in the first quarter.
Barclays is singing Amazon’s praises of late, saying there is no doubt that Amazon will stride through to achieving that trillion- it is simply a matter of what time. This year, shares ascended 33%, partially thanks to the company’s disruptive force of nature.
Amazon has dabbled in online grocery shopping, giving consumers the possibility to order assorted groceries online and pick up without being restricted by the need to set up a specific delivery time. This is a market with $800 billion potential and if the company can gain consumer allegiance, it will only bolster share prices further- shares which already have broken through the $1,000 per share barrier. Notably, Amazon just beat Alphabet as the first of the titans to hit this pinnacle.
Between new opportunities for the company’s cloud computing segment and savvy moves in bricks-and-mortar retail (a $150 billion market) coupled with the strength of Amazon Prime, the company’s pace of growth does not appear to be stalling any time soon. Furniture is rumored to be up next for Amazon, who is launching new warehouses for storing and shipping furniture, bolstering its home goods edge.
The company’s long-term success currently glints with massive potential, as Amazon continues to innovate and diversify its reach into capturing different consumers, which translates to stronger finances. Consider the rest of the Street’s bullish sentiment, as TipRanks analytics indicate AMZN as a Strong Buy. Out of 31 analysts polled by TipRanks in the last 3 months, 28 are bullish on Amazon stock and 3 remain sidelined. With a return potential of nearly 10%, the stock’s consensus target price stands at $1,095.35.