Just as diversification is one of the most well-known rules of investing, over-diversification is an equal danger. Holding too many positions, or stocks in a wider variety of industries than necessary, can lead to underperformance.
However, over-diversification is usually a bigger concern with individual investors. Those who have a team of trained analysts to manage a portfolio can handle a wider variety.
Case in point: Jim Simons (Trades, Portfolio), the guru with the largest portfolio, has a personal wealth of about $12.5 billion. Investors in his high-performing Medallion Fund are composed mainly of employees, former employees, and their families due to the fund’s high fees.
Other gurus stick with a more manageable portfolio, such as Warren Buffett (Trades, Portfolio), who holds 46 positions as of June 30. Then there’s Ian Cumming (Trades, Portfolio) of Leucadia National, who holds only two stocks: Harbinger Group (HRG, Financial) and INTL FCStone Inc. (INTL, Financial). Note that the portfolios on this site do not include bonds and foreign stocks may not be included.
The following are the three largest portfolios of gurus we follow in terms of number of holdings.
Jim Simons (Trades, Portfolio) of Renaissance Technologies
Jim Simons (Trades, Portfolio) founded the hedge fund Renaissance Technologies in 1982, which utilizes mathematical and statistical models to find inefficiencies in highly liquid securities. Today, the fund’s portfolio is valued at almost $43 billion with a whopping 2,753 positions — almost double the size of the next largest portfolio.
Simons began his career as a theoretical mathematician and worked as a code-breaker for the U.S. Department of Defense during the Vietnam War. He also served as head of the mathematics department at SUNY-Stony Brook.
He is notable for hiring those with a mathematical or scientific background, rather than finance. This unique set of analysts leads one of the most successful funds — the flagship Medallion Fund requires a minimum investment of several million dollars, a 5% management fee, and a very high 44% performance fee.
Due to the firm’s massive portfolio, no one holding comprises more than 2% of the total portfolio. McDonald’s (MCD, Financial) is Renaissance’s largest position at 1.9% of the portfolio, with 8,293,900 shares. In the past five years, the average price of sold shares was less than shares bought, at $67.64 and $91.46, respectively.
The second largest holding is Novo Nordisk (NVO, Financial), a pharmaceutical company with two business segments: diabetes care and biopharmaceuticals. The company comprises 1.8% of the portfolio at 16,953,000 shares.
Renaissance came under fire earlier this year for using complex financial structures to avoid paying billions of dollars in taxes. A Senate committee led by Carl Levin of Michigan and John McCain of Arizona oversaw the investigation.
Chuck Royce (Trades, Portfolio) of Royce & Associates
The portfolio of Royce & Associates is the second largest of the gurus we follow at 1,422 holdings, and is worth about $33.5 billion.
Royce founded the firm in 1972 and has been CEO ever since. Royce & Associates focus on small-cap companies but also include micro and mid-cap. It seeks to take advantage of pockets of opportunity that include dividend-paying companies, low-priced companies and turnarounds. Most of the stocks in the fund’s portfolio are companies with less than $5 billion in market capitalization.
The largest holding is in Thor Industries (THO, Financial), which accounts for 1.2% of the portfolio at 6,839,182 shares.
Thor Industries manufactures and sells recreation vehicles and small to mid-sized buses in the U.S. and Canada. Its product lines include Airstream, Crossroads, Dutchmen, General Coach, and Keystone.
Unit Corp (UNT, Financial) also comprises 1.2% of the portfolio at 5,822,122 shares.
Unit Corp engages in contract drilling for natural gas and oil; it has operations in Oklahoma, Texas and to a lesser extent, Arkansas, Colorado, Kansas and others.
Royce & Associates’ Premier Fund has underperformed the S&P 500 for the past three years, though at the height of the financial crisis in 2008, it managed to beat the index by 8.7%.
Paul Tudor Jones (Trades, Portfolio) of Tudor Investment Corp.
Jones founded Tudor Investment Corp. in 1980, which manages assets across fixed income, currency, equity and commodity asset classes. The firm’s portfolio consists of 1,143 holdings worth about $2.6 billion.
Jones also founded the Robin Hood Foundation, which is dedicated to fighting poverty in New York City, and is a favorite cause on Wall Street.
A macro trader, Jones often rides moves in interest rates and currencies based on changes in various nations’ economies. Long-term annual returns for the flagship fund Tudor BVI Global are about 19.5%. However, it has been about 11 years since the fund hit that level. The worst three-year stretch was 2010-2012, when returns averaged only 5% annually.
About 22% of Tudor’s portfolio is in a put option for the SPDR S&P 500 ETF (SPY, Financial) at 2,985,700 shares.
Apple (AAPL, Financial) shares comprise 4.7% of the portfolio at 1,312,050 shares. The average price of shares bought over the past five years was $84.99. The fund has sold out of its Apple shares five times in the past five years.
