Few investors deserve the label “legendary”. Ken Griffin is one of them. He founded Citadel in 1990. It now ranks among the most successful hedge funds of all time.
With Citadel’s portfolio comprising thousands of stocks, it’s no surprise that Griffin owns every stock “Magnificent Seven” shares. However, three seem to be his favorites.
1.Nvidia
Citadel holds a larger position in Nvidia (NASDAQ:NVDA) than any other individual stock. The only asset more important to the hedge fund is the SPDR S&P 500 ETF Trust. At the end of 2023, Citadel’s stake in Nvidia was worth $1.8 billion.
Importantly, Griffin continued to increase Citadel’s stake in Nvidia in the fourth quarter of 2023. He purchased an additional 1.58 million shares, increasing his hedge fund’s position in the chipmaker by nearly by 77%.
It’s easy to guess why the billionaire investor loves Nvidia so much. The company’s graphics processing units (GPUs) have seen skyrocketing demand as organizations have scrambled to build, train and operate Generative AI applications.
2. Amazon
Microsoft is not far behind Nvidia as the second largest Magnificant Seven holder for Citadel. However, I wouldn’t say the tech giant is Griffin’s second favorite stock, Magnificent Seven, for one simple reason: He sold nearly 16% of Citadel’s stake in Microsoft in the fourth quarter. But that’s another story with Amazon (NASDAQ:AMZN).
At the end of 2023, Amazon ranked behind Microsoft as Citadel’s third-largest individual stock. Griffin is clearly bullish on Amazon, as evidenced by his increasing Citadel’s stake in the stock by nearly 223% in the fourth quarter.
What’s so attractive about Amazon? I would put improving profitability at the top of the list. Griffin also undoubtedly recognizes the enormous opportunity that AI presents for Amazon Web Services (AWS).
3. Metaplatforms
Metaplatforms (NASDAQ:META) is Citadel’s fifth-largest holding, excluding the significant stake in the SPDR S&P 500 ETF Trust. As of the end of 2023, Citadel owned 2.46 million shares of the social media giant worth over $869 million.
Before the fourth quarter, Meta was not as large a holding for the hedge fund. Griffin purchased 1.37 million shares in the final quarter of 2023, increasing Citadel’s stake in Meta by 127%. As was the case with Magnificent Seven’s other top stocks, the hedge fund also held call and put options for Meta.
I think Griffin likes Meta for the same reasons he likes Amazon. Meta’s financial results have improved significantly, in part due to cost-cutting initiatives. The company should also have a major growth opportunity through AI, although in a different way than Amazon.
Are these Magnificent Seven actions smart choices now?
Nvidia, Amazon and Meta have fallen from their all-time highs in recent weeks. I wouldn’t be surprised if they fall further. However, significant pullbacks would, in my opinion, create excellent buying opportunities for all three stocks.
Competition is intensifying in the AI chip market. I don’t expect Nvidia to have such a formidable position in the market…
