Billionaire Ken Griffin is the founder and chief executive of $30 billion hedge fund Citadel Advisors, which manages one of the largest 13F portfolios in the world, a $223 billion behemoth as of September 30. One of the richest men in the world with a personal fortune estimated by Forbes at $9.8 billion, Griffin is also a tremendous philanthropist, having donated over $700 million of his own wealth to various causes, including The University of Chicago, the Art Institute of Chicago, and the Museum of Modern Art.
Unlike many of the top hedge funds tracked by Insider Monkey, Citadel is extremely active in options trading, which is why its portfolio value dwarfs the amount of capital that the firm actually manages. Citadel had 20 holdings in its 13F portfolio on September 30 that were valued at more than $1 billion, all of which were put or call positions. Its top four holdings were competing put and call positions on the SPDR S&P 500 ETF (NYSEARCA:SPY) and Amazon.com, Inc. (NASDAQ:AMZN), with those holdings valued at over $40 billion. Citadel’s top long position was a $920 million stake in Morgan Stanley (NYSE:MS), one of the 20 Dividend Stocks That Billionaires Are Piling On, a position which it increased nearly five-fold during the quarter.
During Q3, Citadel added 1,461 new positions to its portfolio, while selling out of 1,071 (or having them expire in the case of options contracts). Given the size of its 13F portfolio, Citadel’s sector allocations remained fairly stable, with the largest increases being seen in healthcare and communications stocks, while the largest declines were in consumer staples and industrials stocks.
Griffin was still confident in the market heading into the fourth quarter, though he was also preparing for the next financial crisis, which he believes is looming due to the current “debt-fueled buying binge”. Speaking at the Bloomberg Global Business Forum towards the end of September, Griffin anticipated that the bull market still had another 18-to-24 months left in it thanks to Trump’s tax overhaul spurring U.S companies to further growth and/or shareholder value creation. Unfortunately for Griffin and his investors, the bull market appears to have ended earlier than anticipated, which contributed to a 3% loss for the fund in November.
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On the next page we’ll check out three of the biggest purchases made by Citadel in Q3, as well as two of the biggest positions that the fund dumped.
Stocks Bought in Q3
Alibaba Group Holding Limited (NYSE:BABA)
– Shares Bought During Q3: 1.03 million
– Value of Holding (as of September 30): $170 million
– Q4 Return (through December 14): -9.57%
– Trailing P/E Ratio: 44.50
Citadel opened a new long position in Alibaba Group Holding Limited (NYSE:BABA) during Q3, to go along with its put and call positions (of course). Citadel was one of several funds to take new positions in Alibaba during the period, as it rose to 6th among the 30 Most Popular Stocks Among Hedge Funds.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
– Shares Bought During Q3: 3.22 million
– Value of Holding (as of September 30): $142.38 million
– Q4 Return (through December 14): -17.28%
– Trailing P/E Ratio: 16.66
– Forward Dividend Yield: 3.59%
Citadel also opened a large new long position in another Asian company during the quarter, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). It’s not the first time Citadel has owned the stock, having previously bought it during the second quarter of 2016. TSM shares rebounded strongly in Q3 following 11% losses in the first-half of the year, but have given up those gains in Q4.
Lowe’s Companies, Inc. (NYSE:LOW)
– Shares Bought During Q3: 3.71 million
– Value of Holding (as of September 30): $603 million
– Q4 Return (through December 14): -18.69%
– Trailing P/E Ratio: 20.75
– Forward Dividend Yield: 2.06%
Citadel raised its position in Lowe’s Companies, Inc. (NYSE:LOW) by 240% during Q3, lifting it to 5.25 million shares and elevating it to the fifth-largest long position in the fund’s 13F portfolio. Citadel appears to be confident in Lowe’s transformation plans, which have laid out a roadmap to 12% operating margins over the long-term, which would represent a 29% jump over the pro forma mark expected in the current fiscal year.
Stocks Sold in Q3
Church & Dwight Co., Inc. (NYSE:CHD)
– Shares Sold During Q3: 2.41 million
– Value of Holding (as of September 30): $0
– Q4 Return (through December 14): +15.77%
– Trailing P/E Ratio: 20.82
– Forward Dividend Yield: 1.27%
Citadel unloaded its long position in Church & Dwight Co., Inc. (NYSE:CHD) during Q3, which was valued at just under $128 million on June 30. The owner of iconic brands such as Arm & Hammer, Pepsodent and Trojan condoms, Church & Dwight Co., Inc. (NYSE:CHD) is anticipating organic sales growth of 4% during the current fiscal year.
KeyCorp (NYSE:KEY)
– Shares Sold During Q3: 19.30 million
– Value of Holding (as of September 30): $0
– Q4 Return (through December 14): -23.93%
– Trailing P/E Ratio: 10.58
– Forward Dividend Yield: 4.49%
KeyCorp (NYSE:KEY) is another stock that Citadel unloaded during Q3, which went against the overall hedge fund industry’s sentiment, as the number of shareholders of the stock rose by 14% during the quarter. However, hedge funds were underweight the bank holding company, owning less than 4% of its shares.
Disclosure: None
