Kellogg Company (K), Procter & Gamble (PG) Among Billionaire Ken Griffin’s Defensive Bets

Kellogg Company (NYSE:K) saw Griffin up his stake 4,000% last quarter. The company’s Pringles acquisition is putting Kellogg on the map, so to speak, in terms of international exposure. We view Kellogg’s valuation as favorable, where it trades at only 15 times earnings, below Post (23x), Hain Celestial (24x) and Unilever (20x). When factoring the company’s below-average expected EPS growth rate, though, we can see there are some concerns, as it sports a PEG above 2.0. Interestingly, Ray Dalio of Bridgewater Associates did make Kellogg one of his newest picks last quarter (check out Ray Dalio’s top picks), which is a big endorsement.

Abbott Laboratories (NYSE:ABT) is one of our favorite drug stocks with solid growth prospects. Griffin had Abbott as one of his largest increases, with Citadel upping its shares owned by over 18,000% last quarter. Although its dividend is less than 1% – compared to Merck, Pfizer and others paying a 3%+ dividend – we are encouraged by its 9% long-term expected earnings growth. Starting in 2013, Abbott plans to spin off its research and development drug business in the form of a new publicly traded company. Abbott’s new R&D segment is expected to have generated upwards of $18 billion in 2012, where legacy Abbott sales is around $23 billion. The true benefit for each company will be higher multiples, as each can better focus on operations. George Soros made Abbott one of his newest picks last quarter (see George Soros’ full equity portfolio).

In short, Griffin has a number of bets in various industries that will perform well despite an uncertain economic backdrop. These include the consumer staples industries – products, food, and bulk retailers. One of Griffin’s other industry bets is pharma, where a rising population will allow Abbott’s legacy brand to perform well, while also offering investors a growth opportunity.

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