Citadel’s quantitative investing model and $65bn in AUM enables the fund to trade and hold thousands of positions at a time. Out of the 790 new stocks purchased in the last quarter of 2012, ADT Corp (NYSE:ADT) was given the most capital, with 0.23% of portfolio devoted to the security company. ADT commands 25% of the market share of the $13bn industry in which it operates. The company reported earnings at the end of last month, delivering a 13% rise in net earnings year over year and announcing a $600m common stock buy back from Credit Suisse International. The stock is still trading at a 15% deficit to analyst’s one year price targets. Doug Silverman of Senator Investment Group holds over $200mm of ADT Corp (NYSE:ADT) (view his other holdings here).
Gulfport Energy Corporation (NASDAQ:GPOR) was Citadel’s second-largest new position. The independent oil and gas company has a relatively small market cap of $2bn and operates primarily in the Louisiana Gulf Coast and in the Permian Basin. GPOR announced a public offering of 7.75mm shares of common stock in mid-February; the dilution brought on a drop in share price, contributing to the -6.3% depreciation the stock has returned since the start of 2013. Despite the near-term fall, Wall Street has high hopes for GPOR and its future site production, with most analysts issuing a Buy rating for Gulfport Energy Corporation (NASDAQ:GPOR). Billionaire Jim Simons has a conservative $5.5mm invested (see his top picks here).
Autodesk, Inc. (NASDAQ:ADSK) is a strong player in the CAD (computer-aided design) industry with its comprehensive and knowledgeable business solutions. Despite missing every earnings announcement in 2012, ADSK managed to beat its latest announcement in February, which came on the heels of positive ratings acknowledgement from Wedbush, RBC Capital, and Goldman Sachs in January. Higher revenues and higher earnings versus the prior-year quarter set the precedent that ADSK would like to continue in 2013, as the company guided revenue growth for this fiscal year. Two Sigma Advisors beefed up its position substantially according to its most recent 13F (check out the fund’s portfolio here).
Which other stocks found their way into Citadel’s portfolio?
Cobalt International Energy, Inc. (NYSE:CIE) was another new oil and gas play for Citadel; contrary to GPOR, CIE’s main exploration areas lie in the Gulf of Mexico and in offshore West Africa. The stock has suffered through the past twelve months, losing 22% of its value, with a significant drop occurring in January after the announcement of a 40mm share secondary public offering. Despite this, Wall Street is once again bullish on many of these smaller exploration companies, advocating accumulation and projecting much higher price targets for the future. Citadel initiated this position as a corporate bond purchase. Dallas-based HBK Investments made a similar debt investment in CIE (see the fund’s top five positions here).
Textron Inc. (NYSE:TXT) was the fifth-largest new addition to Citadel’s portfolio, comprising 0.07% of the fund’s assets. Also a bond purchase, Griffin devoted $43mm towards the fixed income investment. Textron operates in a wide number of industries, including defense, finance, and aerospace (Cessna jets, Bell helicopters). The company’s recent Q4 2012 earnings announcement in January showed a slight miss on the surface, although net earnings gave a profit and revenue grew over the same quarter from last year. Billionaire Steve Cohen joins Griffin in holding TXT bonds (view SAC Capital Advisor’s full holdings here).
Disclosure: I do not own shares of any stocks mentioned in this article.
