In this piece, we will take a look at the top ten stock picks of Ken Griffin and his hedge fund Citadel Investment Group. If you want to skip our introduction to the billionaire hedge fund boss and his firm, then take a look at Ken Griffin Stock Portfolio: Top 5 Stock Picks.
Ken Griffin's Citadel Investment Group is one of the biggest hedge funds in the world. According to Insider Monkey's research, the firm had $62 billion in assets under management as of June 2023, making it the ninth biggest hedge fund in the world. During the third quarter of last year, Citadel had an investment portfolio that was worth $466 billion which reflects the combined value of its direct investment positions such as shareholdings and the notional value of its put and call options along with other similar investments.
2023 started off on a strong note for Citadel as it became one of the best performing hedge funds in 2022 after the 2022 market turmoil. This turmoil saw major selloffs in the technology segment, and it led to some hedge funds bleeding billions of dollars in losses. In fact, we took a look at 2022 hedge fund performance as part of our coverage of the 15 Best Hedge Funds to Work For to rank the funds by the total gains that they had made since their inception and in 2022. This revealed that as a whole, the hedge fund industry had lost $208 billion in 2022, with Chase Coleman and Feroze Dewan's Tiger Global faring off particularly worse as it accounted for 9% of the total losses. However, Mr. Griffin's hedge fund was the best performing hedge fund in 2022 as it posted $16 billion in gains during 2022.
With 2023 now behind us, it's time to take an updated look at Citadel's fortunes. 2023 has been marked by consistent market volatility, as while the rise of AI pushed markets higher, uncertainty about the Federal Reserve's future interest rate policy continued to bring them down. This volatility not only affected stocks, which started off the second half of 2023 on a weaker note, but also the bond market which has seen yields soar to record highs multiple times throughout this year. How has Citadel fared among all this? Well, the first half of 2023 wasn't particularly fruitful for the firm at least if we analyze it from a purely growth based perspective. Data shows that between January and June 2023, Citadel's trading revenue dropped by 35% annually to sit at $2.73 billion in 2023. However, things had stabilized by September, with news reports showing that during the month, Citadel Investment's multi strategy long/short flagship fund Wellington posted 1.7% in gains during the month to bring its year to date gains to 12.3%. At the time, this had beaten the S&P 500 which was up by 11%.
Therefore, Citadel's third quarter investment portfolio is particularly important to watch as the firm has nevertheless kept up with its 2022 performance to an extent through the Wellington fund's September performance. During the quarter, the firm was busy buying stocks as it added significant new positions to its portfolio and increased the weightage of dozens of its old stakes as well. Some of Ken Griffin's latest stock picks during the third quarter include bets on the healthcare sector via investments in Iterum Therapeutics plc (NASDAQ:ITRM) and Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE); stakes in marine shipping through a half a million dollar stake in Euroseas Ltd. (NASDAQ:ESEA); and new positions in a multitude of exchange traded funds as well as a sizeable increase of its position in the U.S. automotive semiconductor firm indie Semiconductor, Inc. (NASDAQ:INDI).
Shifting gears to take a brief look at today's stock market environment, stocks are considerably better these days after the inflation print for October missed estimates by 0.1%. Additionally, there might be further inflation drops in the not so distant future, as the U.S. Producer Price Index for October 2023 posted a 0.5% monthly drop which was its biggest drop in more than three years. This solidifies the prevailing narrative in the market that the Fed should be finished with its interest rate hiking cycle, but it also beckons a recession as a slow job market and declining fuel and producer prices are some of the earliest signs of an economic downturn.
As for Ken Griffin, he believes that a recession can take place in the U.S. during the second quarter of 2024. In a recent chat with Bloomberg, Griffin shared:
So here's our best guess. Our best guess was sometime late this year. It's November, so we're going to be wrong on that guess. Q2 right now is roughly the center point of our distribution as to when we're likely to see the United States in a recessionary environment. And I think there's a couple of really important questions that will come into bear at that moment in time that should influence one's view as to how deep this recession is going to be. Number 1 is what's going to happen to the fiscal policy of the United States. For choice, we think next year fiscal policy will not tighten that much. We're heading into a presidential election. It's really hard for politicians on either side of the aisle. What we need to do, which is to reign in our deficit spending in front of a presidential election. It's just going to be really hard politically to get there next year on that front.
The second real question next year is how much will companies start to unwind the labor hoarding that we've seen over the last couple of years. It's been really hard to hire people. And as such large companies have been really reticent to let people go no matter what the circumstances are. So even if margins are contracting, even if you have gains from automation, people have been very reticent to let people go. Now we're starting to see for the first time that unwinding of that labor hoarding. What we don't know is how much of that labor hoarding as taken place.
With this backdrop, let's take a look at some of Ken Griffin's latest stock picks. The top three are NVIDIA Corporation (NASDAQ:NVDA), Boston Scientific Corporation (NYSE:BSX), and Microsoft Corporation (NASDAQ:MSFT).
Ken Griffin of Citadel Investment Group
To compile our list of Ken Griffin's latest stock picks, we used Citadel Investment's Q3 2023 SEC filings and selected the top ten stocks.
Ken Griffin Stock Portfolio: Top 10 Stock Picks
10. The Home Depot, Inc. (NYSE:HD)
Citadel Investment's Q3 2023 Investment: $591 million
The Home Depot, Inc. (NYSE:HD) is a home improvement retailer headquartered in Atlanta, Georgia. The firm reported an all important third quarter earnings report in November 2023 due to its significance to U.S. consumer health. The corresponding earnings call ended on a positive note, as The Home Depot, Inc. (NYSE:HD)'s CFO shared that inflation is now behind us.
By the end of June 2023, 68 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 $2.6 billion investment.
The Home Depot, Inc. (NYSE:HD) joins Boston Scientific Corporation (NYSE:BSX), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT) in our list of Ken Griffin's latest and top stock picks.
9. Adobe Inc. (NASDAQ:ADBE)
Citadel Investment's Q3 2023 Investment: $606 million
Adobe Inc. (NASDAQ:ADBE) is an American technology company that sells software products for public and professional use. It's one of the biggest contenders to benefit from the current artificial intelligence wave, as its products such as design software can utilize AI to generate new ideas. Adobe Inc. (NASDAQ:ADBE)'s shares are also rated Strong Buy on average and analysts have set an average share price target of $616.
During Q2 2023, 109 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Adobe Inc. (NASDAQ:ADBE). Ken Fisher's Fisher Asset Management owned the biggest stake in the firm which was worth $2.3 billion.
9. Merck & Co., Inc. (NYSE:MRK)
Citadel Investment's Q3 2023 Investment: $687 million
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company headquartered in Rahway, New Jersey. It scored a win in November 2023, when a European agency recommended the approval for its Keytruda drug to help patients with biliary tract cancer.
Insider Monkey took a look at 910 hedge fund holdings for their second quarter of 2023 investments and discovered that 78 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 as it owned 12.6 million shares that were worth $1.4 billion.
8. Comcast Corporation (NASDAQ:CMCSA)
Citadel Investment's Q3 2023 Investment: $690 million
Comcast Corporation (NASDAQ:CMCSA) is an American media and entertainment giant. Despite a Hollywood strike as well as a tough economy, the firm has done well on the financial front lately as it has beaten analyst EPS estimates in all four of its latest quarters.
By the end of this year's second quarter, 66 out of the 910 hedge funds profiled by Insider Monkey had invested in Comcast Corporation (NASDAQ:CMCSA). Jean-Marie Eveillard's First Eagle Investment Management owned the biggest stake among these as it owned $1.3 billion worth of shares.
7. Apple Inc. (NASDAQ:AAPL)
Citadel Investment's Q3 2023 Investment: $719 million
Apple Inc. (NASDAQ:AAPL) really needs no introduction. These days, the firm is under fire from lawmakers over its controversial decision to cancel Jon Steward's television show from its streaming service due to content related to China.
As of June 2023 end, 135 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.
NVIDIA Corporation (NASDAQ:NVDA), Apple Inc. (NASDAQ:AAPL), Boston Scientific Corporation (NYSE:BSX), and Microsoft Corporation (NASDAQ:MSFT) are some of Ken Griffin's top stock picks in Q3 2023.
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Disclosure: None. Ken Griffin Stock Portfolio: Top 10 Stock Picks is originally published on Insider Monkey.