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Top Value Stocks of Super Fund Renaissance Technologies

James Altucher

One of the most viewed hedge fund portfolios at Stockpickr.com is that of Renaissance Technologies, a New York-based hedge fund founded 25 years ago by Jim Simons. The quantitative fund's many PhD mathematicians and statisticians use computer models to determine trends and to source investment ideas.

Its Medallion Fund is considered the most successful hedge fund in the industry, with returns reportedly 10% higher than those of George Soros. Because of its success, the firm is able to command 44% of the profits and a 5% management fee.

Stockpickr has reviewed the stocks held by Renaissance and extracted the stocks with the lowest price/earnings-to-growth, or PEG, ratios, into the Top Stocks of a Top Hedge Fund. The PEG ratio measures the price-to-earnings (P/E) ratio in relation to the company's expected future earnings growth rate. Generally, the lower the PEG, the better the value, with a PEG below 2 considered very favorable.

The Renaissance stockholding with the lowest PEG ratio is Royal Dutch Shell(RDS.B Quote), the Netherlands-based oil and gas company with a PEG of 0.7. The company last week announced that it bought back a significant number of its "A" shares. Royal Dutch has a P/E of 9.1 and a yield of 3.5%.

Royal Dutch Shell appears in the Stockpickr portfolio called Top-Yielding Stocks with Raised Dividends, due to the fact that it raised its dividend by 14% earlier this year. Other stocks that showed up in this portfolio include Reynolds American(RAI Quote), which has a PEG of 2.5, Bank of America(BAC Quote), with a PEG of 1.5, and Wells Fargo(WFC Quote), at a 1.1 PEG.

Another Renaissance stock with a low PEG is Kohl's(KSS Quote). This department store chain has a PEG of 0.8. In order to ramp up sales for the holiday season, Kohl's expanded its hours to attract more shoppers, opening at 4 a.m. instead of 5 a.m. on Black Friday. The stock has a P/E of 13.6.

Kohl's just appeared in Barron's Retail Stock Picks 11-10-2007, a list that also includes Abercrombie & Fitch(ANF Quote), with a PEG of 1, Wal-Mart(WMT Quote), with a PEG of 1.2, and Best Buy(BBY Quote), with a PEG of 1.

Schering-Plough(SGP Quote), with a PEG of 1.3, is another Renaissance holding. The Food and Drug Administration just accepted for review the new-drug application for asenapine, a tablet for the treatment of schizophrenia and acute mania or mixed episodes associated with bipolar disorder. Schering-Plough acquired asenapine through its recent acquisition of Organon BioSciences. Schering has a P/E of 22.7 and a yield of 0.9%.

Schering is owned by Schwab Health Care (SWHFX), a four-star Morningstar rated fund that has generated an average annual return of 18.8% for the last five years. The fund also owns Baxter International(BAX Quote), with a PEG of 1.6, Merck(MRK Quote), with a PEG of 1.8, and McKesson(MCK Quote), which has a PEG of 1.4.

For the rest of Renaissance Technologies' low-PEG-ratio stocks, check out the Top Stocks of a Top Hedge Fund at Stockpickr.com. And for the fund's entire holdings, check out the Renaissance Technologies portfolio too.