Over the past days hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings filed by institutional investment managers with at least $100 million in equity assets under management, as required by the U.S. Securities and Exchange Commission (SEC). In this article, let´s concentrate in one particular hedge fund and try to see the principal holdings in its portfolio. I will look into Citadel Advisor LLC from Kenneth C. Griffin, a Chicago-based investment firm.
Recently the fund reported its equity portfolio, as at the end of last year. The total value of the portfolio amounted to $49.2 billion, up from $42.2 billion disclosed at the end of the previous quarter. Consequently, the fund's total return was 16.8% in the last quarter. The filing revealed that at the end of last year, the fund added 493 new positions to its equity portfolio, and sold out of 362 other companies. The top 10 portfolio holdings as of the end of the quarter represented 9.01%. The largest changes from previous 13-F filings are in the consumer discretionary sector (3%) followed by health care and technological stocks (around 0.4% each).
In this article, we have selected three companies in which the fund holds the largest stakes, in terms of market value.
The first on the list is The Coca-Cola Company (KO), in which Citadel disclosed a $267 million stake with over 6.46 million shares. The Coca-Cola Company is the best global brand (in terms of brand equity) and the world´s largest producer of soft drinks. The company sells products in more than 200 countries and owns or licenses more than 500 brands. It operates in a highly competitive industry with PepsiCo (PEP), Nestle (NSRGY), Groupe Danone (GPDNF), Kraft Foods (KRFT) and Dr. Pepper Snapple Group (DPS). Due to this, the firm's strategy is to use its brands and financial strength to achieve long-term growth. Additionally, it has created an extensive and well-organized global distribution system, which cannot be replicated by any of its competitors at least at a reasonable cost. It has a proven commitment to returning cash to investors, with a current dividend yield of 2.94% which is considered quite good to protect investors' purchasing power.
The Walt Disney Company (DIS) comes in next, the fund owning over 3.15 million shares, worth $240.5 million. The company reported earnings per share increased by 33.8% in the most recent quarter compared to the same quarter a year ago. As we can see in the next chart, the bank has demonstrated a pattern of positive EPS growth over the last years.
We have to mention that the net income growth from the same quarter one year ago has outperformed compared to the media industry average.
In JPMorgan Chase & Co. (JPM) Citadel disclosed ownership of over 4.05 million shares, worth $236.8 million. The company reported earnings per share decreased by 0.5% compared to the same quarter one year prior, but beat the Zacks Consensus Estimate by 4.0%.
The company returns cash to investors. It raised its quarterly dividend by 26.7% to $0.38 per share. The current dividend yield is 2.5%, which is considered quite enough to protect the purchasing power.
In the next chart we can appreciate the stocks' price movement. All of them have an upward trend for the five-year period.
The three stocks are certainly attractive for fundamental investors and make them a worthy investment for Citadel’s portfolio. In future articles we are going to calculate the intrinsic value of these stocks to determine if they are a good buy in terms of valuation.
Disclosure: Patricio Kehoe holds no position in any stocks mentioned.