Billionaire Ken Griffin’s Citadel Has Been Buying The Walt Disney Company (DIS), Selling The Procter & Gamble Company (PG)

Selling defensive consumer stocks. Two of Citadel’s three largest holdings by market value at the beginning of 2013 were McDonald’s Corporation (NYSE:MCD) and The Procter & Gamble Company (NYSE:PG). McDonalds and The Procter & Gamble Company (NYSE:PG) are similar in that they are commonly thought of as classic defensive stocks: in fact, both the fast food restaurant and the personal products company carry a beta of 0.3 and pay a dividend yield of just over 3% at current prices. However, Griffin cut his McDonald’s Corporation (NYSE:MCD) stake roughly in half in the first quarter of the year while selling over 80% of his The Procter & Gamble Company (NYSE:PG) shares. It’s possible that this is a signal that Citadel has become more bullish on the market. Of course, it’s also possible that the fund believes that high demand for safe assets has also made these stocks less attractively priced. Recent growth rates have been quite low at both McDonalds and The Procter & Gamble Company (NYSE:PG), and judging by sell-side forecasts that is expected to continue, yet partly because of their defensive characteristics they boast trailing P/E multiples in the high teens.

We don’t think you have to be bullish for Griffin’s move in these two stocks to make sense- it does appear that the market may be a bit too excited about the yield and relative safety that McDonalds and The Procter & Gamble Company (NYSE:PG) offer. EOG’s growth rates are impressive, though the stock price does account for quite a bit of that growth and it might be best to wait and see how future quarters compare to the trajectory that analysts are expecting. As for The Walt Disney Company (NYSE:DIS), it’s not a classic value stock either and we’d suggest comparing the company to its peers before deciding if its good performance and brand are enough to make it a buy given where it is trading.

Disclosure: I own no shares of any stocks mentioned in this article.