Ken Griffin Upped Stake in Citi, Devon and United Technologies

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Mar 18, 2015

Over the past days hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings by filed institutional investment managers with at least $100 million in equity assets under management, as required by the United States Securities and Exchange Commission (SEC). In this article, let´s concentrate in one particular hedge fund and try to see the principal holdings in its portfolio. I will look at Citadel Investment Group.

Recently, the fund reported its equity portfolio, as at the end of December. The total value of the portfolio amounted to $82.66 million. The filing revealed that at the end of December, the fund added 517 new positions to its equity portfolio, and sold out of 344 other companies. The top ten portfolio holdings as of the end of the quarter represented 7.31%. The largest changes from previous 13-F´s fillings are in the consumer discretionary, industrials and tech sector.

In this article, we have selected three companies, in which the fund holds the largest stakes, in terms of market value.

The first on the list is Citigroup Inc (C, Financial), in which the fund disclosed a $566 million stake with over 10.46 million shares. It is a diversified financial services holding company, provides various financial products and services for consumers, corporations, governments, and institutions worldwide.

The bank focuses on promising regions, like Asia, Latin America, and other emerging markets, while its peers are having some trouble from a lower loan demand in the U.S. and Western Europe.

Citi has significantly decreased earnings per share in the most recent quarter compared to the same quarter a year ago, from $0.71 to $0.06. Further, it gross profit margin is considered low and Citigroup's net margin for the quarter that ended in Dec. 2014 was 1.96%.

If you invested $10,000 five years ago, today you could have $15.220, which represents a 8.9% compound annual growth rate (CAGR).

Other hedge fund gurus have also been active in the company. Ken Fisher (Trades, Portfolio) and Richard Pzena (Trades, Portfolio) have reduced the stock in the last quarter of 2014. They held 11.64 million and 9.91 million shares, respectively. But Larry Robbins (Trades, Portfolio), Whitney Tilson (Trades, Portfolio) and David Tepper (Trades, Portfolio) have sold out the stock during the quarter.

Devon Energy Corp New (DVN, Financial) comes in next, the fund owning over 8.64 million shares, worth $529 million. It is an independent energy company, primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs) in the United States and Canada.

Revenue rose by 129% in the last quarter compared to the same period one year before. But it has reported strong earnings declined. Meanwhile, the stock has plummeted by 9.4% over the past year.

Other hedge fund gurus have also been active in the company. T Boone Pickens (Trades, Portfolio), Michael Price (Trades, Portfolio), George Soros (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) bought the stock in the fourth quarter of 2014, Jim Simons (Trades, Portfolio) has sold out the stake.

In United Technologies Corp (UTX, Financial) the fund disclosed ownership of over 4.56 million shares, worth $524 million. The firm provides technology products and services to building systems and aerospace industries worldwide.

If you invested $10,000 five years ago, today you could have $18,220, which represents a 13.5% compound annual growth rate (CAGR).

Other hedge funds and gurus have also been active in the company. Steven Romick (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) bought the stock in the last quarter of 2014, as well as First Pacific Advisors (Trades, Portfolio). On the other hand, Jim Simons (Trades, Portfolio) sold out the position.

Final Comment

I believe the three stocks still have good upside potential and are certainly attractive for fundamental investors. Ken Griffin upped its stake in the three stock previously analyzed by 207%, 78% and 99%, respectively.

In future articles, I am going to calculate the intrinsic value of these stocks to determine if they are a good buy in terms of valuation.

Disclosure: Omar Venerio holds no position in any stocks or funds mentioned.