Investing

These Are the 2 Biggest Stocks in This $68 Billion Hedge Fund

Rich Duprey

Published: September 26, 2024 7:36 am

While many investors might not know who Israel Englander is, they have likely heard of his Millennium Management hedge fund. It is one of the world’s largest hedge funds with almost $68 billion in assets under management (AUM), making it the fifth biggest.

Englander founded Millennium Management in 1989. He grew the firm from just $35 million and has enjoyed 14% annualized returns, solidly above the 11.1% total return of the S&P 500 index. It did so with much less volatility than the index, too. In fact, the billionaire investor has only had one down year over those 35 years and that was in 2008 during the financial markets collapse. Even then his loss was only 3%.

Institutional Investor described the hedge fund as “rarely the best multi-strategy performer, but it continues to post returns that rank near the top of the strategy.”

That strategy is a multi-pronged approach to investments, using long-short pairing, merger arbitrage, convertible arbitrage (the difference between a stock’s price and its bonds or warrants), and statistical arbitrage (buying and selling stocks according to predefined statistical models).

Millennium owns a lot of stocks. Currently it holds over 3,900, according to its latest 13F filings with the Securities & Exchange Commission. Of those thousands of positions, only a relative handful are really consequential. Just seven stocks have a value of more than $1 billion, and only two of them are worth more than $2 billion. 

Key Points About This Article:

• Israel Englander founded the Millennium Management hedge fund in 1989 and has enjoyed 14% annualized returns at lower volatility than the S&P 500 index.
• Englander grew Millennium into the fifth largest hedge fund by following a multi-strategy investment approach and owns over 3,900 stocks. Just two positions, though, are worth more than $2 billion.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

iShares Core S&P 500 ETF (IVV)

Managed by BlackRock (NYSE:BLK), the iShares Core S&P 500 ETF (NYSEARCA:IVV) is Englander’s largest holding. He owns over 6 million shares that are valued at $3.3 billion. That means the ETF represents 2.7% of Millennium Management’s total holdings. 

Similar to the arguably better-known SDPR S&P 500 ETF Trust (NYSEARCA:SPY), the iShares Core S&P 500 ETF comes with a much lower expense ratio than its peer. It is only 0.03% compared to the SPDR ETF that has a 0.09% expense ratio. While the SPDR ETF offers more liquidity, that is typically of concern only to institutional investors. An individual investor shouldn’t have any issues buying and selling shares of the ETF.

So why do so many hedge funds have an S&P 500 ETF as their largest holding? First, it gives instant diversification across many sectors and industries and has a track record of returning 10.5% on average for seven decades. It is why most investors should consider one as their own one-stop investment.

Yet hedge funds also likely see it as a convenient place to park their money before transitioning to other investments. It is a more productive investment than leaving it as cash.

Apple (AAPL)

Another popular hedge fund holding is Apple (NASDAQ:AAPL), which represents 2.2% of Englander’s portfolio. With no other stock accounting for 2% of the total, the billionaire’s 12.8 million shares valued at $2.7 billion, puts him in striking distance of being one of the top 10 owners of the tech giant’s stock.

Englander has been steadily amassing his position in Apple over the past year or so, buying fairly similar amounts of the stock every quarter. It was different in the second quarter, though, as the investor bought almost 5.2 million shares, a 67% increase in his holdings.

That, of course, came after Apple revealed several new products coming this year, including the introduction of Apple Intelligence, its artificial intelligence technology. Wall Street has high expectations for increased sales, especially for the latest iPhone 16, as a new smartphone upgrade cycle takes hold.

As the single largest individual stock in his portfolio, it wouldn’t be surprising to see Englander making similar big purchases of its stock in the quarters ahead.