Almost everyone loves a good deal. This is true no matter how much money you have. Even billionaires sometimes go bargain hunting.
We saw an example of this in the first quarter of 2024. Billionaire Ken Griffin purchased several stocks for his Citadel. hedge fund — and you can be sure he expected good returns on his investments. Here are three stocks that Griffin bought in the first quarter that are among Citadel’s biggest holdings.
1. Hesse
Hesse (NYSE:HE) ranked third in Citadel’s holdings at the end of the first quarter. This high ranking was due to Griffin’s aggressive buying of oil stocks. During the first quarter, he purchased more than 8.8 million shares of Hess, increasing Citadel’s stake nearly 18-fold.
Griffin probably appreciated Hess’s assessment. The stock currently trades at 15.3 times forward earnings. Its forward earnings multiple was at a similar level throughout the first quarter.
However, I suspect the main reason the billionaire bought more Hess stock was because he was betting on the company’s imminent acquisition by Chevron through. Hess shareholders recently approved the deal. If the transaction is completed, Citadel and other Hess shareholders will receive a premium of nearly 17% over the current stock price.
2. Amazon
Amazon (NASDAQ:AMZN) was already one of Citadel’s top positions before the first quarter. It was the hedge fund’s fifth-largest position at the end of the quarter thanks to Griffin’s purchase of more than 352,000 additional shares.
Based on many commonly used valuation metrics, Amazon doesn’t appear to be a good deal. For example, its shares trade at more than 38 times forward earnings and nearly 8.6 times book value.
However, the company has been notoriously difficult to value using earnings-based metrics because it has invested heavily to drive future growth. But today, Amazon is focused on increasing its profitability. The stock also has a lower price-to-earnings multiple than it has seen over much of the past 10 years.
3. Bank of America
Bank of America (NYSE:BAC) behind Amazon as Citadel’s sixth largest holding at the end of the first quarter. Big bank stocks rose to this position following Griffin’s increase in his hedge fund’s stake in BofA by nearly 390% in the first quarter.
After falling sharply during the first three quarters of 2023, Bank of America stock has rebounded strongly. It’s beating the S&P500 so far this year with a gain of over 17%.
The stock nevertheless remains attractively valued. Its forward price-to-earnings ratio of less than 12.3 is well below the S&P 500’s forward earnings multiple of 21.1 and the S&P 500 financial sector’s average multiple of 15.5.
Are these stocks still good choices?
We won’t know if Griffin continued to purchase these shares in the second quarter until Citadel’s 13F regulatory filing is submitted in August. However, I think all three are still good choices.
There is still a risk that Chevron’s acquisition of Hess could fail. However, Chevron is confident the deal will be concluded later in 2024. I’m waiting for…
