Ken Griffin’s Citadel Investment Group has recently increased its stake in Bonanza Creek Energy Inc (NYSE:BCEI). As a new filing with the SEC showed, Citadel now owns more than 2.35 million shares, representing 5.7% of the company’s outstanding stock. The 13G filing comes just a few weeks after Bonanza Creek Energy was able to replace Multimedia Games Holding Company Inc. (NASDAQ:MGAM) in the S&P SmallCap 600.
Ken Griffin began trading stocks during his time in college, saving up enough money to launch a convertible-bond arbitrage fund by 1987. Just three years later, he founded Citadel Investment Group, with $4.2 million in assets under management. Today, the hedge fund has a diversified equity portfolio valued at around $79.7 billion, along with $16 billion in assets under management.
Mr. Griffin achieved all this by employing quantitative, technology-based methods, long before any other firms. In addition to investing in stocks of companies across various industries, the firm also invests in currency, commodities, and derivatives such as interest-rate swaps, futures, options, repurchase agreements, and reverse repurchase agreements. The Chicago-based fund ran into trouble during the financial crisis, yet was able to make a great recovery, thanks to its combination of quantitative and fundamental analysis with a bottom-up stock picking strategy.
In the case of Bonanza Creek Energy Inc (NYSE:BCEI), Mr Griffin’s hedge fund decided to increase its exposure, despite the currently high risk involved in investing in energy companies, due to the crash of oil prices. Nevertheless, it is worth mentioning that insiders are also buying up shares of Bonanza Creek, thus encouraging others to follow suit.
Bonanza Creek Energy Inc (NYSE:BCEI) is an independent energy company headquartered in Denver, Colorado. The company’s primary activities consist of the acquisition, exploration, development, and production of onshore oil and natural gas assets in Southern Arkansas and Colorado. The firm’s corporate strategy is based on aggressively creating shareholder value by generating high levels of production at their current assets, while constantly looking for new strategic acquisitions in basins with elevated returns throughout the United States. Due to the decline in oil prices in the last months, Bonanza Creek’s last quarterly earnings failed to meet analysts’ consensus estimates for earnings and revenue.
Despite the uncertain outlook, Ken Griffin’s Citadel Investment Group, and the other funds affiliated with the manager, have remained bullish regarding Bonanza Creek stock. Other institutional shareholders have followed suit, such as Israel Englander’s Millennium Management, which holds more than 500,000 shares of the company, despite reducing its holdings by 56% last quarter. Amy Minella’s Cardinal Capital is another hedge fund betting on Bonanza Creek Energy Inc (NYSE:BCEI), with a stake of 522,695 shares as of last quarter.
Disclosure: Pablo Erbar holds no position in any stocks of funds mentioned.