In this article, we discuss the top 5 stock picks of Citadel’s Wellington Fund. If you want to see more top holdings of the fund, check out Citadel’s Wellington Fund Returned 17.5% This Year, Here are its Top 10 Stock Picks.
5. Accenture plc (NYSE:ACN)
Citadel Investment Group’s Stake Value: $465,443,000
Percentage of Citadel Investment Group’s 13F Portfolio: 0.09%
Number of Hedge Fund Holders: 63
Accenture plc (NYSE:ACN) is an Irish-American company that is engaged in professional services, information technology, and business consulting. Ken Griffin’s hedge fund boosted its position in Accenture plc (NYSE:ACN) by 629% in Q1 2022, holding 1.38 million shares worth $465.4 million, representing 0.09% of the total 13F portfolio.
On June 23, Accenture plc (NYSE:ACN) reported its Q2 results, posting earnings per share of $2.90 and a revenue of $16.16 billion, above market consensus by $0.04 and $111.40 million, respectively. Accenture plc (NYSE:ACN) also declared a $0.97 per share quarterly dividend. The dividend is payable on August 15, to shareholders of record as of July 14.
Barclays analyst Ramsey El-Assal on June 25 reiterated an Overweight rating on Accenture plc (NYSE:ACN) and lowered the price target on the stock to $370 from $455 after the fiscal Q3 results. The analyst slashed Accenture plc (NYSE:ACN)’s valuation multiple, noting that market multiples for firms in the IT Services sector have shrunk significantly. On June 29, Exane BNP Paribas analyst Stefan Slowinski downgraded the stock to Neutral from Outperform with a $320 price target.
According to Insider Monkey’s Q1 data, 63 hedge funds were bullish on Accenture plc (NYSE:ACN), up from 50 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is one of the leading shareholders of the company, with 1.7 million shares valued at $578.3 million.
Here is what Polen Global Growth Fund has to say about Accenture plc (NYSE:ACN) in its Q1 2022 investor letter:
“Accenture’s business is firing on all cylinders and continues to enjoy an acceleration in their respective fundamentals because of the increase in digitization around the world. Nearly every company today is searching for ways to become more digital, and Accenture is positioned to provide many of the solutions these companies seek. This inflection in fundamentals was not lost on the market, and each business’s stock performed exceptionally well in 2021. In fact, they represented two of the three top absolute performers for the Global Growth Portfolio last year. As a result, its stock is currently more fully priced. As such, we lowered Accenture to an average weight. We maintain high conviction in the business and plan to own it for many years, but recognize the increase in their prices.”
4. The PNC Financial Services Group, Inc. (NYSE:PNC)
Citadel Investment Group’s Stake Value: $473,357,000
Percentage of Citadel Investment Group’s 13F Portfolio: 0.09%
Number of Hedge Fund Holders: 49
The PNC Financial Services Group, Inc. (NYSE:PNC) is a Pennsylvania-based bank holding company and financial services corporation. Securities filings for Q1 2022 disclose that Ken Griffin’s fund owned 2.5 million shares of The PNC Financial Services Group, Inc. (NYSE:PNC), worth $473.35 million, representing 0.09% of the total 13F holdings. Citadel Investment Group strengthened its hold on The PNC Financial Services Group, Inc. (NYSE:PNC) by 146% in Q1.
On July 1, The PNC Financial Services Group, Inc. (NYSE:PNC) declared a $1.50 per share quarterly dividend, in line with previous. The dividend is payable on August 5, to shareholders of record on July 13. The PNC Financial Services Group, Inc. (NYSE:PNC) delivers a dividend yield of 3.72% as of July 8.
Raymond James analyst Michael Rose on June 30 downgraded The PNC Financial Services Group, Inc. (NYSE:PNC) to Market Perform from Outperform without a price target. The analyst now sees a balanced risk-reward for The PNC Financial Services Group, Inc. (NYSE:PNC) due to a lack of catalysts and more interesting names in his coverage. However, he continues to view the company’s fundamental story positively due to better loan growth, continuing benefits from the BBVA acquisition, and a robust profitability profile, he told investors.
According to Insider Monkey’s first quarter database, 49 hedge funds were bullish on The PNC Financial Services Group, Inc. (NYSE:PNC), up from 40 funds in the previous quarter. Israel Englander’s Millennium Management is a significant shareholder of the company, with 998,049 shares worth $184 million.
3. Boston Scientific Corporation (NYSE:BSX)
Citadel Investment Group’s Stake Value: $573,277,000
Percentage of Citadel Investment Group’s 13F Portfolio: 0.11%
Number of Hedge Fund Holders: 55
Boston Scientific Corporation (NYSE:BSX) is a biotechnology engineering firm that manufactures medical devices that are used in interventional radiology, interventional cardiology, neuromodulation, neurovascular intervention, electrophysiology, endoscopy, oncology, urology, and gynecology. Ken Griffin’s hedge fund boosted its stake in Boston Scientific Corporation (NYSE:BSX) by 99% in Q1, holding a $573.2 million position.
On June 29, Canaccord analyst William Plovanic reaffirmed a Buy rating on Boston Scientific Corporation (NYSE:BSX) but lowered the price target on the shares to $43 from $51. The analyst sees Boston Scientific Corporation (NYSE:BSX) as a growth story given its ongoing M&A activity and internal R&D, as well as a financial story since the company utilizes leverage to boost its top and bottom line. He lowered the price target primarily due to compression in the comp group valuation.
According to Insider Monkey’s data, 55 hedge funds reported long positions in Boston Scientific Corporation (NYSE:BSX) at the end of Q1 2022, up from 46 funds in the prior quarter. Thomas Steyer’s Farallon Capital is the leading position holder in the company, with 15.7 million shares worth over $697 million.
Here is what Artisan Partners has to say about Boston Scientific Corporation (NYSE:BSX) in its Q2 2021 investor letter:
“Among our top contributors (includes) Boston Scientific. Shares of Boston Scientific were volatile throughout most of 2020 as the pandemic drove significant drops in elective medical procedures, though our longer-term constructive view and belief elective medical procedures would bounce back post pandemic prompted us to add to our position. We have been rewarded with shares rebounding this year alongside a recovery in elective medical procedures. Longer-term, we believe the company’s investments in higher growth categories will drive revenue growth to the higher end of its peer group with rising margins.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Citadel Investment Group’s Stake Value: $574,116,000
Percentage of Citadel Investment Group’s 13F Portfolio: 0.11%
Number of Hedge Fund Holders: 271
Ken Griffin’s Citadel Investment Group owned 176,112 shares of Amazon.com, Inc. (NASDAQ:AMZN) in the first quarter of 2022, worth over $574 million, representing 0.11% of the total 13F holdings.
After Amazon.com, Inc. (NASDAQ:AMZN) reported a commercial agreement with Just Eat Takeaway.com that will offer American Prime members a free, one-year Grubhub+ membership, Baird analyst Colin Sebastian observed that the deal was a “capital efficient way for the company to re-enter the local restaurant delivery market”. He subsequently maintained an Outperform rating and a $145 price target on Amazon.com, Inc. (NASDAQ:AMZN) shares.
According to Insider Monkey’s database, Amazon.com, Inc. (NASDAQ:AMZN) was part of 271 hedge fund portfolios at the end of Q1 2022, compared to 279 funds in the prior quarter. Fisher Asset Management held a prominent position in the company, comprising 2.3 million shares worth $7.70 billion.
Here is what Hayden Capital has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter:
“Amazon reached a peak by the end of 1999, at a valuation of over $30BN. Considering that the company only generated $1.64BN in revenues that year (growth of 169% y/y), this equated to a valuation of 18x Price / Sales at the peak.
More notably though, was that Amazon was a pure 1P retailer at the time, meaning that they owned the inventory that they sold. Long-term margin assumptions under this business model were low, at just ~5% expected operating margins (365x implied structural operating profits).
By the time the stock bottomed in September 2001, shares were trading for ~0.7x P/S or 14x structural operating profits.
During those years, Amazon worked to reduce its operating losses and dialed back its growth investments as a result. In 2000, Amazon grew revenues by 68% y/y and reduced its cash burn from -26% operating margins to -6% by the end of the year. In its year-end 2000 earnings release, Amazon indicated that it targeted profitability by the end of 2001.
While the stock continued to decline throughout the first 9 months of 2001, the company reiterated on its 3Q 2001 earnings that it would achieve its profitability target within the next quarter. They had to dial back growth from its previous ~68% y/y in 2000 to just ~13% y/y growth in 2001, in order to cut costs and achieve this.
However, with investors focused on profitability, this period marked the turning point for the stock price, with a bottom ~$6 per share (equating to the aforementioned ~0.7x P/S or ~14x structural operating profits). Notably, based on this, the stock was able to bottom a full year before the NASDAQ index found a bottom in September 2002.
Over the next few years, Amazon’s fundamentals remained strong, with sales growing ~26% y/y in 2002 and proving to investors that the company could be profitable in such an environment. By 2003, the company was generating $5.2BN in sales and reported its first full year of profits.
Within a little over a year of bottoming, by the end of 2002, the share price had recovered 240% to ~$21 per share (equating to 1.8x P/S). By the end of 2003, the stock had recovered to a 4x P/S multiple or $21BN valuation. This equated to a ~8.5x return on the stock price in just a little over two years.”
1. AT&T Inc. (NYSE:T)
Citadel Investment Group’s Stake Value: $577,868,000
Percentage of Citadel Investment Group’s 13F Portfolio: 0.11%
Number of Hedge Fund Holders: 74
AT&T Inc. (NYSE:T) is an American multinational telecommunications, media, and technology company. Ken Griffin’s Citadel Investment Group owned 24.45 million shares of AT&T Inc. (NYSE:T) in the first quarter of 2022, worth $577.8 million, representing 0.11% of the total 13F holdings.
On June 28, AT&T Inc. (NYSE:T) declared a $0.2775 per share quarterly dividend, in line with previous. The dividend is payable on August 1, to shareholders of the company as of July 11. AT&T Inc. (NYSE:T) delivered a dividend yield of 5.34% on July 8.
Scotiabank analyst Maher Yaghi assumed coverage of AT&T Inc. (NYSE:T) on June 30 with a Sector Perform rating and a $22.50 price target. He sees positive prospects for U.S. stocks in terms of pricing, even in wireless, “potentially offering growth after many years of being under pressure”.
According to Insider Monkey’s data, AT&T Inc. (NYSE:T) was part of 74 public hedge fund portfolios at the end of Q1 2022, up from 70 funds in the prior quarter. D E Shaw is a significant shareholder of AT&T Inc. (NYSE:T), with 13.8 million shares worth $326.5 million.
Here is what Weitz Investment Management Hickory Fund has to say about AT&T Inc. (NYSE:T) in its Q4 2021 investor letter:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
You can also take a look at Billionaire Jeffrey Talpins Just Fled From These 10 Healthcare Stocks and 10 Industrial Stocks That Are ‘Must Buys’ According to Caxton Associates.
