Here's What This $65 Billion Hedge Fund Company Is Buying
Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at Citadel Advisors, founded and run by Kenneth Griffin. It's one of the biggest hedge fund companies around, with a reportable stock portfolio totaling $65.5 billion in value as of Sept. 30, 2013.
According to the folks at InsiderMonkey.com, Griffin and his team use "a combination of advanced computer code, complicated financial algorithms and secrecy. Griffin was using quantitative, technology-based methods before many other firms had cell phones." The company took a big hit of more than 50% back in 2008, and with an impressive 20% gain in 2011, finally surpassed its 2008 high.
So what does Citadel's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Elan and Dow Chemical. Other new holdings of interest include Halcon Resources . Halcon Resources is down close to 40% over the past year, though its production has been growing. The company has been investing in greater efficiency and has successfully lowered some of its costs. Wells in the Williston Basin and Eagle Ford regions are quite promising. Halcon Resources has been growing rapidly -- in its last quarter, revenue surged 316% and production 237%. So what's the problem? Well, Halcon is not posting net profits, and it carries significant debt.
Among holdings in which Citadel Advisors increased its stake was Micron Technology . Micron Technology shares have more than tripled over the past year, and are near a 52-week high. Micron's purchase of the Japanese company Elpida has been widely praised, as it has made it the world's second-largest DRAM maker. The new company has twice Micron's previous memory capacity, more pricing power, and a bigger relationship with Apple. Micron Technology recently announced a new, higher-performing processor architecture that's likely to compete with Intel, and its fourth quarter was solid, topping expectations. With Micron's forward P/E ratio near 10 , many still see great value in the stock, and some investing legends such as Seth Klarman and David Einhorn have been buying. Some would like to see its dividend of yore resurrected.
Citadel Advisors reduced its stake in lots of companies, including Broadcom and Advanced Micro Devices . Communications chipmaker Broadcom has bulls optimistic about its presence in the new iPhones and in Nexus 5 devices. That bodes well for Broadcom's bottom line, and a recent acquisition might prove to be a game changer for it, too. Broadcom has been investing heavily in LTE technology, and some expect big LTE deals in the near future. Still, bears worry that Broadcom is having trouble growing its business. Broadcom stock yields 1.7%.
Advanced Micro Devices, or AMD, has been in penny-stock territory all year, perpetually battling giant Intel in an increasingly weak PC market. Short interest in the stock has grown lately, with bears not thrilled about its heavy free cash flow losses in recent years. Bulls, though, are hopeful about its recent cost-cutting and about its shift away from the PC market into more promising, growing areas such as gaming technology, where it's taking on NVIDIA in gaming chips. Some see a turnaround under way, but cautious investors want to see more results before jumping in.
Finally, Citadel's biggest closed positions included BMC Software and AutoZone. Other closed positions of interest include LINN Energy . LINN Energy offers a whopping 10.2% dividend yield and has a management team known for innovation. It specializes in buying mature, productive energy assets -- and is poised to eventually profit from the rich Bakken fields. The company's current quarter is going very well, and it has been making some savvy acquisitions. LINN does face an SEC investigation, though, and bears worry about dry wells, access to funding, and LINN overpaying for growth.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13-F forms can be great places to find intriguing candidates for our portfolios.
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The article Here's What This $65 Billion Hedge Fund Company Is Buying originally appeared on Fool.com.Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Apple and Intel. The Motley Fool recommends Nvidia. It recommends and owns shares of Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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