Ken Griffin’s Wellington Fund Delivers Mind-Numbing Returns: Here are Its Top 15 Stocks
In this article, we will explore Ken Griffin's Wellington Fund delivers mind-numbing returns and its top 15 stocks. If you prefer skipping our introduction to Ken Griffin and his hedge fund, take a look at Ken Griffin's Wellington Fund Delivers Mind-Numbing Returns and Its Top 5 Stocks.
Citadel Investment Group, which Ken Griffin founded in 1990 with an initial capital of $4.2 million, has grown to be one of the most significant hedge funds in the world. The hedge fund started 2024 with $58 billion in assets under management. That makes it one of the world’s top 10 hedge funds by assets.
Citadel Investment Group's success has made Ken Griffin one of the world's top billionaires, with a fortune of more than $36 billion. The hedge fund operates several portfolio funds, with Wellington being its main portfolio. At the end of the third quarter of 2023, Citadel Investment Group’s combined portfolio value across its various funds stood above $466.5 billion.
The hedge fund applies the multi-strategy investing method, where it makes both long and short bets. As a result, its portfolio value consists of shareholding positions in a diverse range of companies, value of its options positions and other investments. In stocks, technology represents billionaire Ken Griffin’s biggest bet.
For the global financial markets, 2023 was a tumultuous year. It was marked by rapidly rising Fed interest rates, which rattled markets and led to widespread debt defaults and bankruptcies.
But for Ken Griffin’s flagship Wellington fund, 2023 was another exceptional year in terms of investment returns. In a year that most hedge funds struggled to make money for their clients, Wellington delivered solid returns of 15.3%, crushing the hedge fund industry average of 4.4%.
The Citadel Investment Group’s fund generated a profit of $7 billion in 2023, all of which it plans to distribute to its clients this year. The fund returned a similar amount to investors the previous year after its 2022 profit jumped 38% to a record $16 billion.
The Wellington fund has a long history of delivering double-digit returns that strongly outpace the hedge fund industry average. In 2021, its returns topped 26%, which improved from returns of 24% in 2020. In 2019, the fund’s returns shot up to 19.4%, more than doubling from 9.1% in 2018.
Amid Wellington’s solid returns, Citadel Investment Group has kept up the tradition of handing back significant bucks to its clients from its profit. It has returned $25 billion to its investors since 2018.
Ken Griffin of Citadel Investment Group
These results show that Citadel Investment Group’s Wellington portfolio is important to watch for investors who like learning the strategies of master stock pickers like Ken Griffin.
For the markets, 2024 is shaping up to be an eventful year. The war in Ukraine continues to drag on, keeping global markets on edge. There’s also no end in sight to the Israel-Hamas war amid expanding geopolitical tensions across the Middle East. In the U.S., a presidential election year like this one could bring many uncertainties to the markets.
Amid all this, Ken Griffin has predicted that a recession could hit the U.S. economy in the second quarter of 2024. While recession concerns remain, the stock market could benefit from the prospects of the Fed starting to trim interest rates to avoid an economic downturn. The AI frenzy that propelled many stocks in the past year could also continue to impact markets. An increasing number of businesses and tech companies are getting into the AI game, and investors have shown that they’re willing to follow AI trends with their money.
Nevertheless, you would expect pro investors like Ken Griffin to align their portfolios accordingly for potential market upheavals in 2024. Ken Griffin’s hedge fund holds positions in many stocks across industries. In the third quarter of 2023, the billionaire hedge fund boss made a number of adjustments to Citadel’s investment portfolios. Citadel Investment Group opened fresh positions in some stocks and increased positions in some existing holdings. With that in mind, let’s take a look at Ken Griffin's top 15 stock picks.
Our Methodology
Ken Griffin's Wellington Fund delivered solid returns in 2023 owing to using advanced technology and data science to scan and invest in various markets. After analyzing Citadel Investment Group 13F filings, we have settled on the top stocks where the hedge fund has invested most of its money. The stocks are ranked in ascending order based on the hedge fund's equity stakes. Hedge funds' top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Ken Griffin's Wellington Fund Delivers Mind-Numbing Returns: Here are Its Top Stocks
15. Micron Technology Inc (NASDAQ:MU)
Citadel Investment Group’s Equity Stake: $551.69 Million
Number of Hedge Fund Holders: 90
Micron Technology Inc (NASDAQ:MU) is one of Ken Griffin's investment plays in the burgeoning semiconductor sector. The company designs, develops, manufactures, and sells memory and storage products worldwide comprising dynamic random access memory. Micron Technology Inc (NASDAQ:MU) also offers memory products for the cloud server enterprise client graphics and automotive markets.
Micron Technology Inc (NASDAQ:MU) benefited from the artificial intelligence boom in 2023, going by the 68% gain that also enabled Ken Griffin's Wellington Fund to deliver solid returns.
90 out of the 910 hedge funds part of Insider Monkey's database had bought Micron Technology Inc (NASDAQ:MU)'s shares as of the end of Q3 2023, up from 86 in the previous quarter. In Q3 2023, Ken Griffins Citadel Investment Group was the largest investor. The hedge fund held stakes worth $551.69 million in Micron Technology Inc (NASDAQ:MU) in Q3.
UBS recently called Micron Technology Inc (NASDAQ:MU) one of its top semiconductor picks for 2024.
"Even after this rally into year-end, we would remain overweight semis in 2024 as inventory has peaked and started converting to revenue," UBS's Timothy Arcuri said.
14. T-Mobile Us Inc (NASDAQ:TMUS)
Citadel Investment Group’s Equity Stake: $562.94 Million
Number of Hedge Fund Holders: 79
Bellevue, Washington-based T-Mobile Us Inc (NASDAQ:TMUS) is a communication services company that provides mobile communication services. It offers voice messaging and data services. T-Mobile US Inc (NASDAQ:TMUS) also provides wireless devices, including smartphones, wearables and tablets.
T-Mobile Us Inc (NASDAQ:TMUS) is one of the stocks that propelled Ken Griffin's Wellington Fund to deliver solid returns after a 14% gain in 2023. The stock also offers an opportunity to generate passive income through a yield of 0.40%. Citadel Investment Group held stakes worth $562.94 million in T-Mobile Us Inc (NASDAQ:TMUS) as of Q3.
Insider Monkey looked at 910 hedge fund holdings for their third quarter of 2023 investments and discovered that 79 had bought the firm's shares. T-Mobile Us Inc. (NASDAQ: TMUS) 's largest hedge fund investor back then was Ken Griffin's Citadel Investment Group, which owned shares worth $562.94 million.
ClearBridge Investments made the following comment about T-Mobile US, Inc. (NASDAQ:TMUS) in its Q3 2023 investor letter:
“During the quarter we initiated positions in two new names: T-Mobile US, Inc. (NASDAQ:TMUS) and Gilead Sciences. T-Mobile is the best-in-class player in the wireless space, delivering the strongest growth with the lowest cost structure and the best consumer proposition. T-Mobile’s strength is rooted in its advantaged competitive position. Its superior spectrum holdings enable it to provide better wireless service at meaningfully lower cost. T-Mobile’s annual capital expenditures run about $10 billion, on the order of half the amount its peers must spend. Due to its lower cost structure, T-Mobile can undercut its competitors on price while still generating compelling profitability and returns.
This combination — superior service at lower prices — has enabled T-Mobile to outgrow its competition. In the three years since completing its merger with Sprint, T-Mobile has grown its post-paid subscriber base by about 22%. Over the same period, AT&T’s has grown by about 14%, while Verizon’s by less than 5%.
Given the high fixed-cost nature of the wireless business, these steady increases in revenue growth have led to outsize increases in profits and free cash flow. Free cash flow in 2023 is expected to come in around $13.5 billion, up from less than $8 billion last year. In 2024 free cash flow is expected to grow by over 20% to approximately $17 billion — providing a 10% yield based on today’s stock price.
We have long admired T-Mobile, but until recently the stock did not pay a dividend. The company announced its inaugural dividend in September, and we bought the stock shortly thereafter. The initial yield is about 2% and it is expected to grow about 10% per year.”
13. Palo Alto Networks Inc (NASDAQ:PANW)
Citadel Investment Group’s Equity Stake: $563.37 Million
Number of Hedge Fund Holders: 79
Palo Alto Networks Inc (NASDAQ:PANW) is a software infrastructure company that provides cybersecurity solutions. Palo Alto Networks Inc (NASDAQ:PANW) offers firewall appliances, software and security management solutions. It also offers subscription services covering threat prevention, malware and persistent threats.
Palo Alto Networks Inc (NASDAQ:PANW) was one of the best-performing stocks in 2023, rallying 108%, allowing Ken Griffin's Wellington Fund to deliver strong returns. The rally came as the company experienced strong demand for its cybersecurity solutions. Citadel Investment Group increased its stake in Palo Alto Networks Inc (NASDAQ:PANW) by 150% in Q3 to $563.37 million.
During Q3 2023, 79 out of the 910 hedge funds in Insider Monkey's database had held a stake in Palo Alto Networks Inc (NASDAQ:PANW). Ken Griffins' Citadel Investment Group owned the biggest stake in Palo Alto Networks Inc (NASDAQ:PANW).
TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q3 2023 investor letter:
"Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. Palo Alto Networks, Inc. (NASDAQ:PANW) supplies network and cloud-based security solutions to enterprises, service providers, and government entities. The latest quarter was mixed, with the company falling shy versus the Street on billings, in line for revenues, and outpacing earnings.
12. West Pharmaceutical Services, Inc. (NYSE:WST)
Citadel Investment Group’s Equity Stake: $582.24 Million
Number of Hedge Fund Holders: 42
Headquartered in Exton, Pennsylvania, West Pharmaceutical Services, Inc. (NYSE:WST) is a medical instruments and supplies company that manufactures and sells containment and delivery systems for injectable drugs. West Pharmaceutical Services, Inc. (NYSE:WST) offers stoppers and seals for injectable packaging systems, syringes, and cartridge components.
By the end of September 2023, 42 out of the 910 hedge funds tracked by Insider Monkey had invested in West Pharmaceutical Services, Inc. (NYSE:WST). West Pharmaceutical Services Inc. (NYSE: WST)'s largest shareholder in Q3 2023 was Ken Griffins' Citadel Investment Group.
11. The Home Depot, Inc. (NYSE:HD)
Citadel Investment Group’s Equity Stake: $591.61 Million
Number of Hedge Fund Holders: 76
The Home Depot, Inc. (NYSE:HD) is a consumer cyclical investment play in the Citadel Investment Group portfolio that operates as a home improvement retailer. The company offers various building materials, home improvement, garden, and décor products. The Home Depot, Inc. (NYSE:HD) also provides installation services for flooring, water heaters, and garage doors.
The Home Depot, Inc. (NYSE:HD) was up 9% in 2023 as the company benefited from solid consumer spending power amid a resilient economy. Similarly, Citadel Investment Group increased its stakes in The Home Depot, Inc. (NYSE:HD) by 611% in Q3 to $591.61 million.
By the end of September 2023, 76 out of the 910 hedge funds tracked by Insider Monkey had invested in the company. The Home Depot, Inc. (NYSE:HD)'s largest shareholder in Q3 2023 was Ken Fisher's Fisher Asset Management, courtesy of its $2.60 billion investment.
In its Q3 2023 investor letter, Madison Investments, an asset management firm, said the following about The Home Depot, Inc. (NYSE:HD):
“We updated the sustainable scorecard for The Home Depot, Inc. (NYSE:HD) and maintained our Above Average Rating. Home Depot’s corporate responsibilities focus on three pillars: focusing on its people, operating sustainably, and strengthening its communities. Home Depot continues to focus on its people by investing billions of dollars in wages, training, and benefit enhancement. The company’s environmental targets include the reduction of direct (Scope 1) and indirect (Scope 2) emissions by 42% by 2030, as well as a 25% decrease in emissions related to the “use of products sold” (Scope 3 emissions). Both targets are from a 2020 base year.
Separately, The Home Depot Foundation announced that it will invest $6 million in skilled trades training to address the 400,000 job openings across the construction industry. This grant launches a new program that will provide free, skilled trades training and scholarships for veterans and military families.”
10. Adobe Inc (NASDAQ:ADBE)
Citadel Investment Group’s Equity Stake: $606.93 Million
Number of Hedge Fund Holders: 112
Adobe Inc (NASDAQ:ADBE) is a technology company allowing Ken Griffin's Wellington Fund to deliver mind-numbing returns. Operating as a diversified software company, Adobe Inc (NASDAQ:ADBE) offers products, services and solutions that allow individuals, teams, and enterprises to create, publish and promote content.
During Q3 2023, 112 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Adobe Inc. (NASDAQ:ADBE), up from 109 in the previous quarter. Ken Fisher's Fisher Asset Management owned the biggest stake in Adobe Inc (NASDAQ:ADBE), worth $2.32 billion.
Here is what Polen Global Growth has to say about Adobe Inc. (NASDAQ:ADBE) in its Q3 2023 investor letter:
"Both Alphabet and Adobe's businesses continue to perform well. With respect to Adobe, the most recent quarter delivered more of the same with constant currency revenue growing 13%, margin expansion, and over 2% of shares outstanding repurchased for non-GAAP earnings growth of over 20%. We believe its approach to GenAI through Firefly, which guarantees safe content because it trains on Adobe Stock, will continue to be attractive to enterprises. The counter to GenAI, and something we are keeping an eye on with Alphabet and Adobe, is that it requires heavy investment. While both businesses can leverage their scale and manage costs in other areas, we expect the investment in future growth through GenAI will weigh on company-wide margins over the near term."
9. Merck & Co., Inc. (NYSE:MRK)
Citadel Investment Group’s Equity Stake: $687.41 Million
Number of Hedge Fund Holders: 85
Merck & Co., Inc. (NYSE:MRK) is a healthcare company that offers human health pharmaceutical products in oncology, acute care, immunology, neuroscience, cardiovascular health, and diabetes. Merck & Co., Inc. (NYSE:MRK) also develops and markets veterinary pharmaceutical vaccines and health management solutions.
While Merck & Co., Inc. (NYSE:MRK) was flat in 2023, it still contributed to Citadel Investment Group returns owing to its 2.61% dividend yield. Likewise, the hedge fund increased its stake in Merck & Co., Inc. (NYSE:MRK) by 263% in Q3 2023 to $687.41 million.
Insider Monkey looked at 910 hedge fund holdings for their third quarter of 2023 investments and discovered that 85 had bought the firm's shares. Merck & Co., Inc. (NYSE:MRK)’s largest hedge fund investor back then was Ken Fisher's Fisher Asset Management, owning shares worth $1.37 billion.
8. Comcast Corporation (NASDAQ:CMCSA)
Citadel Investment Group’s Equity Stake: $690.81 Million
Number of Hedge Fund Holders: 68
Comcast Corporation (NASDAQ:CMCSA) is one of Ken Griffin's investment plays in the communication services sector. Comcast Corporation (NASDAQ:CMCSA) operates as a media and technology company providing residential broadband and wireless connectivity services, video services and advertising sales.
Comcast Corporation (NASDAQ:CMCSA) was up by 26% in 2023, outperforming the S&P 500, which was up by about 24%.
By the end of this year's third quarter, 68 of the 910 hedge funds profiled by Insider Monkey had invested in Comcast Corporation (NASDAQ:CMCSA). Jean-Marie Vuillard's First Eagle Investment Management owned the biggest stake among these, owning $1.42 billion worth of shares.
7. Apple Inc. (NASDAQ:AAPL)
Citadel Investment Group’s Equity Stake: $719.04 Million
Number of Hedge Fund Holders: 134
Apple Inc. (NASDAQ:AAPL) has always been Ken Griffin's go-to stock for gaining exposure in the technology sector. The company is best known for designing, manufacturing and selling an array of devices, including smartphones, tablets, MacBooks, and computers. Apple Inc. (NASDAQ:AAPL) also boasts a significant presence on the services front through its app store, cloud computing unit, and game subscription service.
Apple Inc. (NASDAQ:AAPL), gaining 48% in 2023, was one of the catalysts that allowed Ken Griffin's Wellington Fund to deliver mind-numbing returns. In addition, the company continued to return value through buybacks and dividends with a yield of 0.53%. Griffin's hedge fund increased its stake in Apple Inc. (NASDAQ:AAPL) by 414% in Q3 2023 to $719.04 million.
As of September 2023, 134 out of the 910 hedge funds polled by Insider Monkey had bought and owned the firm's shares. Apple Inc. (NASDAQ:AAPL)'s largest shareholder in the third quarter remained Warren Buffett's Berkshire Hathaway, which owned 915 million shares that are worth $156 billion.
Wedgewood Partners, an investment management company, made the following comment about Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL) was also a top contributor to performance during the fourth quarter. The Company’s services segment revenue growth accelerated to +16% over last year, one of the fastest growth rates since Covid-19 lockdowns, helping drive +11% growth in earnings per share. The strength in the Company’s services segment was aided by over 1 billion paid subscribers across Apple’s media platforms. We estimate that there are more than 2 billion iOS devices in Apple’s global installed base, which still represents a very large addressable share of their current subscriber count. Apple also continues to innovate across its hardware portfolio, with custom silicon for nearly all its device form factors. More recently, the Company launched its new line of Mac computers, which included their M3 family of chips, including the M3 Max, which contains up to an astonishing 92 billion transistors. Apple’s long-term strategy of creating products with customized hardware and software should continue to differentiate their products and help drive solid revenue growth and expense leverage across the Company’s ecosystem.”
6. JPMorgan Chase & Co. (NYSE:JPM)
Citadel Investment Group’s Equity Stake: $744.89 Million
Number of Hedge Fund Holders: 109
New York-based JPMorgan Chase & Co. (NYSE:JPM) is a financial services company that offers deposit investment and lending products. JPMorgan Chase & Co. (NYSE:JPM) also provides cash management and payment services to consumers and small businesses. Its CIB segment offers investment banking products and services.
For JPMorgan Chase & Co. (NYSE:JPM)’s Q3 2023 shareholdings, 109 out of the 910 hedge funds profiled by Insider Monkey held a stake in JPMorgan Chase & Co. (NYSE:JPM), compared to 106 in the second quarter of 2023. In the same quarter, Fisher Asset Management was JPMorgan Chase & Co. (NYSE:JPM)'s biggest shareholder, owning a $1.65 billion stake.
Here is what Vltava Fund said about JPMorgan Chase & Co. (NYSE:JPM) in its fourth quarter 2023 investor letter:
“Last spring, the US went through a brief banking crisis that cost several smaller and medium-sized banks their lives. One of them, First Republic Bank, with assets of $230 billion, went into receivership and was bought out by the largest US bank, JPMorgan Chase & Co. (NYSE:JPM). The acquisition terms were very favourable for JPM and the facts that few, if any, other banks could have taken over the whole of First Republic Bank in its then-present state while guaranteeing more than $100 billion of its deposits played a role. JPM could do it. It is not only the largest, but also by its balance sheet the strongest US bank and, in our opinion, clearly the best managed. It has come out of this crisis even stronger. We have actively followed the banking sector for 20 years in many countries around the world. Our view is that a well-managed bank can be a very good long-term investment but that it is better to focus on the best and highest quality available. Banking is not a sector where it pays to trade quality for cheaper valuations. That is why we hold JPM.”
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Disclosure: None. Ken Griffin's Wellington Fund Delivers Mind-Numbing Returns: Here are Its Top 15 Stocks is originally published on Insider Monkey.
