As two new filings with the SEC showed, Ken Griffin’s Citadel Advisors has disclosed raising its passive stakes in two companies: Servicemaster Global Holdings Inc (NYSE:SERV) and Green Plains Inc (NASDAQ:GPRE). In Servicemaster, Citadel Advisors has increased its stake to 6.92 million shares, giving it ownership of 5.1% of common stock, while in Green Plainsthe fund has built a 5.3% position with 1.99 million shares. Lastly, we’ll consider the fund’s largest portfolio position heading into 2015, a hedge play against Apple Inc. (NASDAQ:AAPL).
Self-made billionaire Ken Griffin founded Citadel Investment Group in 1990, and has been running one of the most successful hedge funds in the world ever since. The massive, diversified portfolio of the fund is the result of a combination of quantitative analysis and fundamental research, which includes utilizing statistical models to identify trends in equity markets. From there, the fund uses a bottom-up approach to identifying under-performing stocks in target sectors.
In Servicemaster Global Holdings Inc (NYSE:SERV), Griffin’s 6.92 million shares has more than doubled his position in the company from his previously reported 3.29 million shares. Servicemaster operates a number of different residential services brands including Terminix for pest control, Merry Maids for home cleaning, and American Home Shield, a provider of home warranties. Since its IPO in June, 2014, shares of the company have nearly doubled, up by 95.82%. This year the strong trend has continued, as shares gained 31.3% year-to-date. Jeffrey Gates’ Gates Capital Management is another hedge fund that has taken interest in the company, opening a new position of 1.44 million shares last quarter.
In Green Plains Inc (NASDAQ:GPRE), Griffin has upped his position to 1.99 million shares from 1.44 million shares he held at the end of 2014. The purchases continue a trend of increasing ownership of Green Plains by Citadel, which has steadily been increasing its position over the past few quarters. There has been some major investor activity around this stock at the end of 2014, with Jason Karp’s Tourbillon Capital Partners initiating a stake with 1.25 million shares, while Jason Capello’s Merchants’ Gate Capital sold off its entire position of 1.95 million shares as the fund closed its equity portfolio at the end of last year.
Green Plains has slumped considerably along with weakening oil prices, shedding nearly 50% of its value since its highs of last summer. The company runs a number of segments within the ethanol sector, including grain handling and storage, the production of ethanol and corn oil, and marketing and distribution for its other segments. Despite record operating income of $286 million announced in February, and the expectation that oil prices are on the verge of rebounding, shares in Green Plains are still down 5.33% year-to-date.
Lastly, we come to Ken Griffin’s large put position in Apple Inc. (NASDAQ:AAPL). Last week we covered which companies had the most put positions among funds we track, and discovered that Apple landed in fifth spot on that list. We concluded however that in the case of Apple, the put options on it were largely as hedges against either long positions in Apple, or long positions in other intrinsically related equities.
Ken Griffin’s case is somewhat unique in that his Apple Inc. (NASDAQ:AAPL) put options are the most valuable holding in his massive $82.66 billion portfolio. Nor is this a new phenomenon; Apple put positions have topped his portfolio for the last year, and put or call options of Apple have dominated his portfolio for much of the past four years. In fact Griffin’s put and call options on Apple have made up much more sizable portions of his portfolio in the past, as much as 16% combined.
Griffin held 9.68 million shares equivalent of Apple put options. He likewise cut his stake underlying call options and the long position in Apple quite significantly as well, by 33% and 51% respectively. It’s possible that with Apple on the verge of entering new business segments in the coming years, including automobiles, that the stock becomes a much less useful hedge against specific sectors of Griffin’s portfolio, which is why he’s beginning to lean on it less. We’ll see if the trend throughout this quarter.
Disclosure: None
