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Billionaire Ken Griffin Takes 5% Stake In QLogic

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A 13G filed with the SEC has reported that Citadel Investment Group, which is managed by billionaire Ken Griffin, owns a total of 4.6 million shares of QLogic Corporation (NASDAQ:QLGC), a semiconductor product designer with a market capitalization of $1 billion. This gave Citadel ownership of 5% of the total shares outstanding. See more stock picks from billionaire Ken Griffin.

13G filings have both advantages and disadvantages compared to quarterly 13Fs: 13Fs provide a much more comprehensive picture of what a hedge fund owns, as opposed to 13Gs which are only filed when the fund has a large ownership stake (which is extremely rare in the case of large-cap companies). As a result they are well suited for the development of investment strategies; for example, we have found that the most popular small cap stocks among hedge funds offer an average excess return of 18 percentage points per year (learn more about our small cap strategy). However, 13Fs are only filed quarterly and the most recent ones are now two months out of date, and arguably any particular pick is more of an “idea” than a dependable guide to what a fund actually owns.

CITADEL INVESTMENT GROUPQLogic’s revenues were down 14% in its last fiscal quarter (which ended in December) compared to the same period in the previous fiscal year. This was fiscal Q3 for QLogic Corporation, with the first half of the year showing a similar trendline. As a result, earnings per share have been down by about half as the company’s operating expenses have actually risen. QLogic’s stock price is down 31% in the last year as results have disappointed the market.

Wall Street analysts currently expect 79 cents in earnings per share for the forward fiscal year ending in March 2014, which would make for a forward P/E of 14. In addition, about half of the market cap is accounted for in cash as QLogic Corporation reported almost $500 million in cash and marketable securities on its balance sheet. Cash flow from operations has declined, but was still $100 million in the first nine months of the current fiscal year. This makes for a trailing EV/EBITDA multiple of 5.2x. Renaissance Technologies, founded by billionaire Jim Simons, had a smaller position of 1.9 million shares at the end of December (find Renaissance’s favorite stocks). Cliff Asness’s AQR Capital Management added shares over the course of the fourth quarter and closed 2012 with a total of 1.7 million shares in its portfolio (check out more stocks Asness was buying).

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