Investors often wonder exactly what famous investment gurus or fund managers invest in, figuring that such people have large secret investments in obscure companies of which the average investor is not aware, or in exotic derivatives or other alternative investments. However, a peek inside the hedge fund of legendary investor Paul Tudor Jones II reveals a portfolio topped with familiar stocks common to many mutual funds, ETFs or individual stock portfolios. There is, however, one holding that may surprise investors somewhat, and it sits at the very top of Jones’ portfolio holdings list.
Paul Tudor Jones
With an estimated $5 billion net worth, Paul Tudor Jones is one of the most successful and legendary investors of the 20th century, and is still making money with profitable investments in the new millennium. As of 2015, Jones ranked 114 on the Forbes 400 list, 352 on its Billionaires list and 18 on its Hedge Fund Managers list. Tudor Investment Corp. has provided investors with average annual returns of approximately 19% since the fund’s inception. Tudor Jones’ stellar performance over more than a 30-year period puts him in the company of the most successful traders of all time.
Jones earned a degree in economics from the University of Virginia prior to working for brokerage firm E.F. Hutton and Company, first as a floor clerk and later as a stockbroker. According to Jones himself, he came into his own as a trader under the tutelage of another legendary trader, Eli Tullis. In addition to his investment analysis and management endeavors, Jones has also become well known as an active and generous philanthropist.
Tudor Investment Corp.’s Top Five Holdings
Jones’ famed hedge fund, Tudor Investment Corp., employs a long/short equity trading strategy and holds a portfolio with total assets worth approximately $3 billion, made up of more than 1,300 individual stocks. With two notable exceptions, no single stock accounts for much more than 1% of the portfolio, and many stocks account for as little as 0.01% of its total assets. As of Sept. 30, 2015, technology and financial services are among the most heavily represented market sectors in the portfolio. Tudor buys and sells several hundred stocks per quarter. The most recent reported quarter saw the fund purchase over 400 new stocks and close out positions in another 400-plus stocks.
The one single stock that accounts for more than 2% of the portfolio’s assets is Facebook Inc. (NASDAQ: FB
), which accounts for about 6.6% of the portfolio’s assets. Facebook has been a market standout in the technology sector, showing a 53.74% three-year average annualized return.
However, Facebook is not Tudor Investment Corp.’s top holding. The equity investment in which Tudor holds more than 2.5 million shares, and accounts for approximately 16% of the portfolio’s total assets, is not some foreign or exotic security but a simple, broad-based total market index fund, the SPDR S&P500 ETF Trust (NYSEARCA: SPY
) from State Street Global Advisors. It is the most widely held S&P500 Index fund ETF, with more than $169 million in total assets under management (AUM). The fund’s five-year annualized return is 9.69%.