Stockpickr: Top Picks From a Top Hedge Fund

I have nothing bad to say about hedge fund Renaissance Technologies, except that the folks there wouldn't consider hiring me when I applied. I went to grad school and majored in computer science, but didn't finish my studies.

Jim Simons, founder of Renaissance, was very polite and told me that they only hire Ph.D.s. So that's why I didn't land a job at the best hedge fund in the world.

It would've been a great experience to work there, because Renaissance is considered the most consistently successful hedge fund out there. It has averaged returns of 35% per year since 1989 after all fees. And those fees aren't trivial: There is a 5% management fee and a 44% performance fee.

At Stockpickr, we keep track of some of the fund's top holdings, as well as some of the smaller, more speculative positions that it is adding to.

Renaissance prides itself on extensive modeling and using statistics to determine where the data suggest it has an edge. I like to look at the holdings and try to find patterns.

The main pattern I can see in the stocks accumulated over the past year is that the fund likes micro- and small-caps that have little or no debt and enormous amounts of cash when compared with market capitalization. The fund probably has done a study and determined that these types of companies tend to outperform.

Let's take a look at one of Renaissance's holdings, semiconductor name Advanced Analogic Technologies(AATI Quote).