We recently published a list of Ken Griffin Stock Portfolio: 10 Stocks to Buy. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against other Ken Griffin’s portfolio stocks to buy.
One of Wall Street’s Greatest
Ken Griffin, the visionary founder of Citadel Investment Group, launched his hedge fund in 1990 with $4.2 million, achieving unprecedented success. In 2022, Griffin’s fund delivered an extraordinary 153% return, driven by accurate bets on inflation and interest rates. With a portfolio now exceeding $518 billion, Citadel Investment Group is one of Wall Street’s most closely watched hedge funds, consistently achieving over 25% annual returns since 2016. Citadel employs a multi-strategy investment approach, combining long and short positions to capitalize on market opportunities. Its flagship fund, Wellington, anchors Citadel’s operations by investing across multiple asset classes and sectors, emphasizing diversification. In 2022, Wellington achieved an impressive 38% return, building on 26% in 2021 and 24% in 2020. Notably, the fund posted a 19.4% gain in 2019, more than double its 9.1% return in 2018.
While Griffin’s legacy is strongly tied to Citadel’s hedge fund, a significant portion of his Forbes-calculated net worth comes from Citadel Securities, valued at $22 billion after Sequoia and Paradigm acquired a small stake two years ago. Citadel Securities has redefined modern trading, challenging the traditional dominance of big banks. In just two decades, it has become the largest stock buyer and seller in the U.S.; in August, it facilitated more equity trading within its electronic network than the New York Stock Exchange’s main market. In 2023, Citadel Securities generated $2.8 billion in profit from $6.3 billion in net revenue, with an impressive $4.9 billion in net revenue achieved in the first half of 2024 alone.
READ ALSO: Cathie Wood’s 11 Favorite AI Stocks and Jim Cramer November Portfolio: Top 10 Stocks.
The billionaire also ranks among the top donors to outside spending groups for the 2024 election, which secured former President Donald Trump a second term. As the founder and CEO of Citadel, he contributed $100 million to conservative causes, making him the fifth-largest individual contributor to federal election spending, according to Federal Election Commission data. While Griffin has donated millions to Republican candidates, particularly since 2022, he has notably refrained from directly supporting Trump’s campaign. A self-described “Reagan Republican,” Griffin has historically favored establishment-focused Super PACs, such as the Congressional Leadership Fund.
Our Methodology
For this our list of the 10 best stocks in Ken Griffin’s portfolio, we examined Citadel Investment Group’s stock portfolio from the third quarter of 2024. The stocks are ranked based on the firm’s stake value in each holding.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a person’s hand holding a bottle of pharmaceuticals.
Merck & Co., Inc. (NYSE:MRK)
Citadel Investment Group’s Stake: $799.6 million
Merck & Co., Inc. (NYSE:MRK) is a global healthcare leader operating through two primary segments: Pharmaceutical and Animal Health. The Pharmaceutical segment includes a broad array of human health products targeting areas like oncology, immunology, and neuroscience, with popular brands such as Keytruda, Gardasil, Winrevair, and Bravecto.
While investors remain wary about the future expiration of the Keytruda patent, Merck & Co., Inc. (NYSE:MRK) still has several years before it loses exclusivity on this blockbuster antibody. In the third quarter, Merck’s worldwide sales rose 4% year-over-year to $16.7 billion, with Keytruda sales increasing 17% (or 21% on a constant currency basis) to reach $7.4 billion.
On November 1, Leerink Partners maintained an Outperform rating on Merck & Co., Inc. (NYSE:MRK), noting investor caution around Gardasil’s recent performance. However, Merck’s management expressed confidence in Gardasil’s revenue potential, particularly as demand continues to grow in regions outside of China, reinforcing its role in Merck’s long-term growth strategy.
Oakmark Equity and Income Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its Q3 2024 investor letter:
“Merck & Co., Inc. (NYSE:MRK) is a global pharmaceutical firm with leading oncology, vaccine and animal health franchises. Premier products in Merck’s portfolio include Keytruda, Gardasil, Winrevair and Bravecto. Outsized contributor Keytruda is an immuno-oncology drug that treats several cancers and tumors. Keytruda is an astounding clinical and commercial success that is on track to become one of the best-selling prescription drugs to date. Investor angst surrounding Keytruda’s pending U.S. patent expiration in 2028 presented a chance to buy shares at a discounted valuation. We believe opportunities to extend Keytruda’s duration through life cycle management are underappreciated. More importantly, discounted cash flows from products already on market cover today’s entire stock price, meaning there is minimal value ascribed to a promising pipeline with strong sales potential. We believe Merck is led by a capable management team that looks to reinvest these cash flows in an accretive manner.”
Overall, MRK ranks 4th on our list of Ken Griffin’s portfolio stocks to buy. While we acknowledge the potential of MRK, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.