In May, billionaire Ken Griffin’s Citadel Investment Group filed its 13F for the first quarter of 2013 with the SEC, disclosing many of its long equity positions as of the end of March. Obviously this information is a bit old by now, but in addition to tracking quarterly 13F filings for the purpose of helping develop investment strategies (for example, we’ve found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year) we can also follow Citadel’s stock picks over time. Chances are that if Griffin and his team have owned a stock for the last two years and it was a large position at the end of Q1, they still own a good deal of it today and it is worth looking at this screen of names for interesting ideas. Read on for our quick take on the five largest holdings from Citadel’s most recent 13F which the fund owned at least $100 million of at the end of March 2011 or see the full list of stock picks over time.
Griffin reported a position of 6.7 million shares in Citigroup Inc (NYSE:C) in the filing for Q1 2013. The megabank has roughly doubled from its levels a year ago, yet is still valued at a discount to the book value of its equity with a P/B ratio of 0.8. Citigroup Inc (NYSE:C) has reported its results for the second quarter of the year, with earnings up slightly on a q/q basis and more than 20% higher than their levels a year earlier. Appaloosa Management, which is managed by billionaire David Tepper, had 8.5 million shares in its portfolio according to that fund’s own 13F (find Tepper’s stock picks).
Cabot Oil & Gas Corporation (NYSE:COG) has been another of Griffin’s long term picks with the most recent filing disclosing ownership of just under 4 million shares. Revenue and earnings at the oil and gas exploration and production company, which is notable for its position in the Marcellus and Eagle Ford shale plays, have been rising sharply. However, markets have already priced in high future earnings growth and even the forward P/E is rather high at 28. Billionaire Dan Loeb’s Third Point initiated a position of 1.3 million shares in Cabot Oil & Gas Corporation (NYSE:COG) between January and March (see more stocks Loeb was buying).
According to the filing, Citadel had large holdings of PNC Financial Services Group Inc (NYSE:PNC) in both early 2011 and early 2013. At a market capitalization of $41 billion, the bank is valued at a small premium to book. It does feature a low trailing earnings multiple (of 14) for a company which has been increasing net income at a high rate, but Wall Street analysts seem to be expecting improvements to slow next year and so the forward P/E of 11 is actually higher than Citi’s. GAMCO Investors reported owning about 970,000 shares of PNC Financial Services Group Inc (NYSE:PNC); that fund is managed by billionaire Mario Gabelli.
The fund increased its stake in Broadcom Corporation (NASDAQ:BRCM), which has been another long term holding, by 42% in the first quarter of the year. The sell-side is predicting high earnings growth at Broadcom Corporation (NASDAQ:BRCM) over the next several years, resulting in a forward P/E of only 11 and a five-year PEG ratio of 0.8. Profits have been up, and revenue rose over 10% in its last quarterly report compared to the first quarter of 2012. Renaissance Technologies, whose founder Jim Simons is now a billionaire, was another significant shareholder in Broadcom according to our database (research Renaissance’s favorite stocks).
Disclosure: I own no shares of any stocks mentioned in this article.
