Show Me The Money: Inside Ken Griffin's Citadel's Jaw-Dropping $7 Billion Return
Citadel Founder and CEO Ken Griffin is one of the most successful investors of all time, managing over $62 billion in assets. He is also the founder of Citadel Securities, the largest market-making firm for the New York Stock Exchange and one of the largest designated market makers in the world. Citadel Securities is involved in one out of four stock trades placed in U.S. exchanges and nearly 40% of all retail trades.
With a net worth of $37.5 billion, Griffin is one of the richest hedge fund managers in the world and is ranked No. 37 on the Forbes real-time billionaires list. His investments have reaped significant gains, as he returned $7 billion to clients last year after its profits surged over 30%.
Griffin expects to make similar returns to investors this year, as his investment strategy generates outstanding returns. Citadel's multistrategy fund Wellington has gained nearly 15% year-to-date through November, making it one of the best-performing hedge funds this year. An inside source told Reuters that Citadel plans to divest approximately $7 billion in profits to investors this year to keep its total assets under management at $58 billion starting in 2024.
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Apart from individual stock holdings, Griffin is a big believer in passive exchange-traded fund ETF investments, as approximately 1.12% of Citadel's portfolio is invested in SPDR S&P 500 ETF, making it the company's third-largest holding.
Take a look at some of the top stocks in Griffin's portfolio.
Microsoft
Microsoft Corp. (NASDAQ:MSFT) is Citadel's biggest holding, accounting for 1.72% of the total portfolio. Microsoft's blockbuster performance this year has reaped significant profits for Griffin, as the company's shares surged over 55% this year.
Citadel also held 15.02 million shares of Activision Blizzard Inc. as of the third quarter ended Sept. 30. Griffin's fund bought shares of Activision Blizzard for approximately $87.06 per share, which were acquired by Microsoft for $95 each on Oct. 13. Griffin seems to have pocketed nearly $120 million from this acquisition.
Microsoft's expanding reach in the field of artificial intelligence has also reaped substantial income for Griffin, as the Magnificent Seven stock hiked its quarterly dividends by over 10% to $0.75 on Nov. 15. Microsoft currently pays out $3 in dividends per share, yielding 0.81% on the current price. This should make a nice payday for Griffin, who holds 5.04 million shares of Microsoft through Citadel LLC.
Boston Scientific
Boston Scientific Corp. (NYSE:BSX), one of the largest medical device manufacturers in the U.S., is Citadel's second-largest holding as of Sept. 30. Griffin holds 21.16 million shares of Boston Scientific through his hedge fund, accounting for 1.21% of his portfolio.
Boston Scientific stock has gained almost 20% year to date and hit its all-time high of $55.68 on Dec. 13. Griffin bought Boston Scientific stock for an average price of $47.63 per share.
The company's strong financials and growth prospects make it a compelling buy. In the third quarter, Boston Scientific's net sales rose 11.2% year over year to $3.53 billion. Net income increased by 190.2% from the same period last year to $505 million, translating to earnings of $0.34 per share.
Analysts expect this momentum to continue, as the consensus revenue estimate of $3.59 billion for the fourth quarter ending this month indicates 10.8% year-over-year growth.
"We are well-positioned for the long term, backed by our category leadership strategy, strong pipeline of innovation and track record of strong commercial execution," Boston Scientific Chairman and CEO Mike Mahoney said.
Nvidia
Nvidia Corp. (NASDAQ:NVDA), the best-performing Magnificient Seven stock so far this year, is one of Citadel's top holdings, accounting for 0.97% of its portfolio. Nvidia has surged by over 242% so far this year and crossed the $1 trillion market cap in May.
Nvidia's revenue rose 206% year over year to $18.12 billion in the fiscal third quarter, which ended Oct. 29. Operating income rose 1,633% from the same period last year to $10.42 billion. Earnings per share (EPS) came in at $3.71, up 1,274% year over year.
Analysts expect the company's revenues to rise over 200% year over year to $18.4 billion in the quarter ending in January. The consensus EPS estimate of $4.12 for the current quarter indicates 368% year-over-year growth.
Despite gaining nearly 250% over the past year, Nvidia is well-positioned to surge further as analysts maintain a bullish outlook on the stock. Investment banking firm Stifel has a Buy rating on the stock with a price target of $665, reflecting a potential upside of over 32%.
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