10 Best Gold Stocks To Buy Now According To Billionaire Hedge Fund | The Mesh Report

10 Best Gold Stocks To Buy Now According To Billionaire Hedge Fund

The Gold Enthusiast December 16, 2020 Comments Off on 10 Best Gold Stocks To Buy Now According To Billionaire Hedge Fund

In this article we presented the 10 best gold stocks to buy now using billionaire quant hedge fund Renaissance Technologies’ stock picks.

The billionaire investor Jim Simons is among the most successful hedge fund managers since he founded Renaissance Technologies Corporation in 1982. One of the greatest investors of all time, Jim Simons, like to play with market volatility based on the strategy that almost takes the human element out of investing. The hedge fund with more than $100 billion in asset management uses various complex mathematical models for stock pickings and trade executions. Here is what we said about RenTech previously in two separate articles:

Jim Simons’ Medallion Fund is the best hedge fund that Insider Monkey has come across. The fund’s returns are so spectacular that Jim Simons became one of the richest people on the planet. Medallion Fund employs high frequency trading and exploits inefficiencies in the stock market. One strategy they use takes advantage of the inefficiencies in the execution of large transactions. One of their algorithms determines whether a very large order is executed and front runs it. As a result Medallion experiences high transaction costs and high expenses. That’s why they charge a 5% fixed fee. On top of that they charge performance fee. That fee had been 20%, but after 2000 it increased initially to 36% and then to 44%.

…Renaissance Technologies is probably the best quant hedge fund in the market. Their Medallion Fund literally prints $1 billion to $3 billion a year and, naturally, it doesn’t accept any outside money. The fund was started in 1982 by James Simons, a mathematician and code breaker. You can watch this rare interview if you aren’t familiar with Jim Simons or RenTech.

Renaissance Technologies introduced new funds that accept outside money after it closed the Medallion Fund to outside investors. These funds also hold stocks for several months or in some cases more than a year. These strategies are designed to outperform the market by decent margins (a few percentage points per year). Also some of the positions in these funds are very large positions often reaching $250 million or more. These strategies target institutional equity investors and Renaissance’s fund implementing these strategies is called Renaissance Institutional Equities Fund (RIEF). This fund was started in mid-2005.”

Renaissance Technologies Corporation’s computer-based model of predicting market trends failed to accurately forecast the pandemic shock during the first half of the year as shutdowns and the global economic downturn has led the hedge fund to post a double-digit loss in the first half of the year. The firm managed to recover those losses during the second half of the year on the back of a recovery in the broader market index.

The firm has generated profits from investments in gold stocks throughout this year. Before starting a countdown on RenTech’s profitable gold investments, let’s briefly review how this billionaire investor’s hedge fund has made changes in its portfolio to beat the market.

On the positive side, Renaissance Technologies’ strategy of diversifying its portfolio towards numerous industries and assets helped in reducing the impact of the economic shock.

In addition, the Long Island-based group that is managing more than $100 billion in assets has made aggressive changes in the stock portfolio during September to align with the market trends. The hedge fund has bought 495 stocks during the third quarter and added to its 1159 positions. Meanwhile, the firm has sold out 547 stocks and reduced positions in 1673 equities in the September quarter. The market value of Renaissance Technologies portfolio fell from $115 billion to $100 billion, according to the latest filings. You should keep in mind that most of these changes are a result of high frequency trading. However, the fund’s largest positions are likely to be longer term bets made by its Institutional Equities Fund.

While Jim Simons reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 78 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Gold has outperformed the broader market trends this year despite pandemic related challenges and market uncertainties. Let’s start examining the 10 best gold stocks to buy now according to Rentech’s quantitatively picked biggest gold stocks.

10. Royal Gold (NASDAQ: RGLD)

RGLD ranks 10th in our list of the 10 best gold stocks to buy now. Royal Gold has been a member of Jim Simons stock portfolio since the second quarter of 2018. Although Simons’ hedge fund Renaissance Technologies has sold 9% of shares in the latest quarter, Royal Gold still accounts for 0.10% of the overall portfolio and it is the tenth-largest gold stock that Simons believes is a good buy. First Eagle Asset Management is also a big RGLD bull with a $300 million position at the end of September.

Royal Gold has been offering returns both in the form of share price gains and dividends. Last month, it raised the quarterly dividend by 7% to $0.30 per share, marking the 19th straight year of a dividend increase. Meanwhile, its share price soared almost 189% in the past five years. The sharp growth in gold price added to Royal Gold revenue growth in the past few quarters. Gold accounts for 75% of overall revenue.

9. Alamos Gold (NYSE: AGI)

The North American gold miner Alamos Gold (NYSE: AGI) is the ninth largest gold stock position in Jim Simons portfolio, valued at $105 million. The billionaire hedge fund has first initiated a stake in the gold mining company during the fourth quarter of 2017. Alamos Gold accounted for 0.11% of $100 billion worth of Simons portfolio at the end of the third quarter, according to the latest filings.

Shares of Alamos Gold rallied almost 48% since the beginning of this year, extending the five years gains to 180%. In addition to massive returns through capital appreciation, the gold mining company has also been offering relatively small dividends when compared to Royal Gold.

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