In this article, we discuss the top 10 stock picks of Ken Griffin. If you want to see more stocks in this selection, check out Ken Griffin Stock Portfolio: Top 5 Stock Picks.
Citadel Investment Group, a multi-strategy hedge fund run by billionaire Ken Griffin, announced that its flagship Wellington multi-strategy fund returned 2.5% in September, bringing the year-to-date performance to about 29% at the end of September 2022. Citadel’s Tactical Trading fund gained 2.4% in September, supported by fundamental long-short and quantitative equity strategies.
Griffin, who manages nearly $439 billion in client money, plans for an expansion into Asia, motivated by China President Xi Jinping’s renewed focus on the economy. Griffin said in an interview to Bloomberg on November 16:
“China, given the size of its capital markets, is a center of focus for our investment team.”
Ken Griffin observed that resilient growth in China could reduce the risk of a significant recession in 2023 in the world's second-largest economy. He further explained:
“If we see higher growth in China, that will make the recession shallower. Seeing growth in the region accelerate only encourages us to increase the size of our commitment.”
We selected the top 10 stocks from the Ken Griffin portfolio as of the end of the third quarter of 2022 for this analysis. The stocks are arranged according to the hedge fund’s stake value in each holding. Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022 was used to assess the hedge fund sentiment around the securities.
Ken Griffin of Citadel Investment Group
Ken Griffin Stock Portfolio: Top Stock Picks
10. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 52
Citadel Investment Group’s Stake Value: $396,405,000
U.S. Bancorp (NYSE:USB) is an American bank holding company that operates through Corporate and Commercial Banking, Consumer and Business Banking, Wealth Management and Investment Services, Payment Services, and Treasury and Corporate Support segments. Ken Griffin Citadel Investment Group boosted its stake in U.S. Bancorp (NYSE:USB) by 109% during the third quarter of 2022, holding 9.8 million shares worth $396.40 million.
On October 14, U.S. Bancorp (NYSE:USB) reported its Q3 results, posting a non-GAAP EPS of $1.18 and a revenue of $6.33 billion, outperforming Wall Street estimates by $0.02 and $130 million, respectively. The revenue increased 7.5% year-over-year in Q3 2022.
JPMorgan analyst Vivek Juneja on November 2 raised the price target on U.S. Bancorp (NYSE:USB) to $47 from $46 and kept an Overweight rating on the shares. The large-cap banks are presently seeing a huge benefit to revenues from rising rates and benign credit quality, while some impact from recession was already priced into the shares, the analyst told investors in a research note. In the short-term, he thinks bank stocks "should continue to benefit from rotation away from other sectors seeing more headwinds."
According to Insider Monkey’s data, 52 hedge funds were long U.S. Bancorp (NYSE:USB) at the end of the third quarter of 2022, compared to 43 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway held the biggest stake in the company, comprising 77.7 million shares worth $3.13 billion.
Like Amazon.com, Inc. (NASDAQ:AMZN), Tesla, Inc. (NASDAQ:TSLA), and Apple Inc. (NASDAQ:AAPL), U.S. Bancorp (NYSE:USB) is one of the stocks backed by Ken Griffin.
Here is what ClearBridge Investments Dividend Strategy has to say about U.S. Bancorp (NYSE:USB) in its Q4 2021 investor letter:
“Over the last year, we have repositioned our portfolio to navigate the course we see ahead. We have increased our exposure to interest-rate sensitive banks by adding to existing positions in U.S. Bancorp.”
9. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 269
Citadel Investment Group’s Stake Value: $411,594,000
Microsoft Corporation (NASDAQ:MSFT) has been part of the Ken Griffin portfolio since the last quarter of 2010, apart from a few breaks over the years. In the third quarter of 2022, Ken Griffin strengthened his hold on Microsoft Corporation (NASDAQ:MSFT) by 31%. The billionaire owns 1.76 million shares of the company worth $411.5 million, representing 0.09% of the total 13F securities.
On November 16, Lockheed Martin Corporation (NYSE:LMT) and Microsoft Corporation (NASDAQ:MSFT) announced a landmark expansion of their strategic relationship to help power the next generation of technology for the Department of Defense.
Macquarie analyst Sarah Hindlian-Bowler on November 2 initiated coverage of Microsoft Corporation (NASDAQ:MSFT) with a Neutral rating and a $234 price target. The analyst sees short-term constraints for Microsoft Corporation (NASDAQ:MSFT) from weakness in the macro backdrop, cloud pull-in from COVID, softer PC sales, rampant energy costs, and low consumer purchasing power.
According to Insider Monkey’s Q3 data, 269 hedge funds were long Microsoft Corporation (NASDAQ:MSFT), compared to 258 funds in the preceding quarter. Bill & Melinda Gates Foundation Trust is the largest position holder in the company, with 39.2 million shares worth over $9 billion.
“Also among our bottom contributors were media and technology giant Alphabet, software and IT services provider Microsoft Corporation (NASDAQ:MSFT) and insurance company American International Group (AIG). Microsoft shares declined in Q3, along with other tech companies, as rising interest rates impacted the near-term outlook. We expect the business to continue to generate strong revenue growth and benefit from operating leverage. Microsoft’s cloud computing services business, Azure, is generating robust growth, confirming its competitive positioning.”
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 74
Citadel Investment Group’s Stake Value: $469,022,000
Broadcom Inc. (NASDAQ:AVGO) is a California-based company that designs, develops, and supplies semiconductor devices worldwide. Ken Griffin boosted his stake in Broadcom Inc. (NASDAQ:AVGO) by 57% in Q3 2022, holding 1.05 million shares worth $469 million and representing 0.10% of the total 13F securities. Griffin has owned a position in Broadcom Inc. (NASDAQ:AVGO) since Q2 2018.
On October 18, Deutsche Bank analyst Ross Seymore reiterated a Buy rating on Broadcom Inc. (NASDAQ:AVGO) but slashed the price target on the shares to $575 from $635. Fears of fundamental deterioration are "leading to very bearish investor positioning" into the Q3 results for semiconductors, the analyst told investors in a research note. The analyst forecasts Q3 earnings season to "yield more pervasive signs of weakness" and for the second consecutive quarter, he sees downside risk to 2023 estimates.
According to Insider Monkey’s data, 74 hedge funds were bullish on Broadcom Inc. (NASDAQ:AVGO) at the end of Q3 2022, compared to 66 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the biggest position holder in the company, with 1.5 million shares worth approximately $673 million.
“Tech stocks, including Broadcom Inc. (NASDAQ:AVGO), were one of the hardest-hit sectors due to fears over a weakening macroeconomic environment. Broadcom, however, outperformed semiconductor peers as its end-market exposures provided relatively more defensive characteristics.”
7. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 117
Citadel Investment Group’s Stake Value: $477,091,000
Salesforce, Inc. (NYSE:CRM) provides customer relationship management technology that connects enterprises and customers worldwide. Securities filings for the third quarter of 2022 reveal that Ken Griffin strengthened his hold on Salesforce, Inc. (NYSE:CRM) by 416%. Citadel Investment Group owns 3.3 million shares of Salesforce, Inc. (NYSE:CRM) worth $477 million, representing 0.10% of the total portfolio. On November 10, Salesforce, Inc. (NYSE:CRM) stock rose more than 8%, making it one of the most prominent winners in enterprise software as the sector responded positively to cooling inflation data.
On November 18, BMO Capital analyst Keith Bachman reiterated an Outperform rating on Salesforce, Inc. (NYSE:CRM) but lowered the price target on the shares to $180 from $190. The economy deteriorated for all software stocks, which has led to delayed deals, the analyst told investors. He is more cautious heading into the third quarter results.
According to Insider Monkey’s data, 117 hedge funds were bullish on Salesforce, Inc. (NYSE:CRM) at the end of September 2022, compared to 116 funds in the prior quarter. Harris Associates is a prominent stakeholder of the company, with 6.5 million shares worth $944 million.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Tesla, Inc. (NASDAQ:TSLA), and Apple Inc. (NASDAQ:AAPL), elite investors are piling into Salesforce, Inc. (NYSE:CRM).
“Software has been a solid long-term performer for the Strategy and a key point of differentiation versus the benchmark. But even recurring revenue businesses enabling digital transformation are not immune from the vagaries of the COVID-19 recovery. Salesforce, Inc. (NYSE:CRM) (-12.8%) has detracted from results due to slowing revenue growth driven by a combination of factors, including pull-forward of enterprise digitization demand during COVID-19, some operational missteps, and lengthening sales cycles.
We believe the company still has ample room for revenue growth across its various platforms and should benefit from budget consolidation as customers seek control over tech spending in a weakening economy. We also see significant room for margin expansion. While we have trimmed our Salesforce (CRM) exposure, we maintain confidence that the stock will re-rate to a level that reflects its growth potential.”
6. Humana Inc. (NYSE:HUM)
Number of Hedge Fund Holders: 76
Citadel Investment Group’s Stake Value: $557,569,000
Humana Inc. (NYSE:HUM) is a health and well-being company in the United States, and it operates through three segments – Retail, Group and Specialty, and Healthcare Services. In Q3 2022, Ken Griffin raised his stake in Humana Inc. (NYSE:HUM) by 4%, holding 1.14 million shares worth $557.5 million, representing 0.12% of the total 13F securities.
On October 27, Humana Inc. (NYSE:HUM) declared a $0.7875 per share quarterly dividend, in line with previous. The dividend is payable on January 27, 2023 to shareholders of record on December 30. On November 3, Humana Inc. (NYSE:HUM) also announced plans to buy back $1.0 billion worth of its common stock.
Wells Fargo analyst Stephen Baxter on November 8 raised the price target on Humana Inc. (NYSE:HUM) to $610 from $558 and kept an Overweight rating on the shares. The analyst noted the company announced Q3 results that were better-than-forecasted and reiterated its 2022 guidance, which was lifted ahead of the company's Investor Day in September.
Among the hedge funds tracked by Insider Monkey, 76 funds were long Humana Inc. (NYSE:HUM) at the end of Q3 2022, compared to 69 funds in the preceding quarter. Jeffrey Smith’s Starboard Value LP is a significant stakeholder of the company, with 953,000 shares worth $557.5 million.
Diamond Hill made the following comment about Humana Inc. (NYSE:HUM) in its Q3 2022 investor letter:
“Humana Inc. (NYSE:HUM) has held up well amid volatile markets given the characteristics of the Medicare Advantage market and expectations that it can return to market growth in the 2023 annual enrollment period. We are confident in Humana’s value creation plan and ability to get back to market enrollment growth in addition to an increasing contribution from its health care services businesses. Shares of Texas Instruments outperformed as the COVID lockdowns eased in China, and customers could accept the product shipments leading to an upside in expectations.”
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Disclosure: None. Ken Griffin Stock Portfolio: Top 10 Stock Picks is originally published on Insider Monkey.