Citadel’s Wellington Fund Returned 17.5% This Year. Here are its Top 10 Stock Picks

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In this article, we discuss the top 10 stock picks of Citadel’s Wellington Fund. If you want to see more top holdings of the fund, check out Citadel’s Wellington Fund Returned 17.5% This Year. Here are its Top 5 Stock Picks

Ken Griffin’s Citadel Investment Group is one of the largest Wall Street hedge funds, with a Q1 portfolio worth $484.45 billion. In June 2022, Citadel’s flagship Wellington Fund gained 4%, bringing the 2022 returns to nearly 17.5%. The hedge fund’s tactical trading and global fixed income funds jumped 3% each and its equity fund posted returns exceeding 4% in April. In May, Ken Griffin’s hedge fund climbed 0.23% even when the S&P 500 remained flat, and it posted an overall gain of 7.5% in April, while the benchmark index lost 9% in value. The billionaire employs a market-neutral strategy at Citadel that thrived despite inflation being at a 40-year high and the Russian invasion of Ukraine, which decimated the broader market. 

Citadel Investment Group has more than $50 billion in assets under management as of May 2022. The hedge fund aims to achieve alpha by investing in corporate bonds, convertible bonds, bank debt, credit derivatives, credit indices, and stocks. The investment strategies at Citadel include equities, fixed income & macro, commodities, credit, and global quantitative. 

Ken Griffin’s hedge fund invests primarily in the communications, finance, healthcare, industrials, energy, consumer discretionary, and information technology sectors. In Q1 2022, Citadel Investment Group purchased 1689 new stocks, sold out of 1962 securities, reduced holdings in 6042 names, and made additional purchases in 5558 companies. Some of the most notable stocks in Ken Griffin’s Citadel Investment Group include Amazon.com, Inc. (NASDAQ:AMZN), AT&T Inc. (NYSE:T), and Booking Holdings Inc. (NASDAQ:BKNG). 

Citadel’s Wellington Fund Returned 17.5% This Year, Here are its Top 10 Stock Picks

Ken Griffin of Citadel Investment Group

Our Methodology  

We used the Q1 2022 portfolio of Citadel Investment Group for this analysis, selecting the hedge fund’s top 10 holdings. We ignored the CALL and PUT options while selecting the stocks from the portfolio.

10. Johnson Controls International plc (NYSE:JCI)

Citadel Investment Group’s Stake Value: $385,359,000

Percentage of Citadel Investment Group’s 13F Portfolio: 0.07%

Number of Hedge Fund Holders: 44

Johnson Controls International plc (NYSE:JCI) is an American-Irish multinational firm that manufactures fire, HVAC, and security equipment. Securities filings for Q1 2022 reveal that Ken Griffin’s Citadel Investment Group owned 5.8 million shares of Johnson Controls International plc (NYSE:JCI), worth $385.4 million. The hedge fund boosted its position by 115% in Q1. 

On June 8, Johnson Controls International plc (NYSE:JCI) declared a quarterly dividend of $0.35 per share, in line with previous. The dividend is payable on July 15, to shareholders of record on June 21. Johnson Controls International plc (NYSE:JCI)’s dividend yield on July 8 came in at 2.96%. 

Barclays analyst Julian Mitchell on July 8 reiterated an Overweight rating on Johnson Controls International plc (NYSE:JCI) but lowered the price target on the shares to $60 from $65. The analyst reduced estimates across his coverage, citing higher gaps in the multi-industry demand. He expects 25% to 30% of his coverage to slash 2022 earnings guidance. 

According to Insider Monkey’s data, 44 hedge funds were bullish on Johnson Controls International plc (NYSE:JCI) at the end of Q1 2022, up from 42 funds in the earlier quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a prominent shareholder of the company, with 2.5 million shares worth $169.4 million. 

Like Amazon.com, Inc. (NASDAQ:AMZN), AT&T Inc. (NYSE:T), and Booking Holdings Inc. (NASDAQ:BKNG), elite hedge funds are piling into Johnson Controls International plc (NYSE:JCI). 

Here is what Aristotle Capital Management Value Equity has to say about Johnson Controls International plc (NYSE:JCI) in its Q1 2022 investor letter:

“As investors since the fourth quarter of 2017, we have enjoyed a front-row view of the large transformation that has taken place at Johnson Controls. Once a multi-industrial corporation, the company successfully turned itself into a pure-play buildings solutions and technology provider. Catalysts we previously identified for Johnson Controls included synergies following its merger with Tyco International, which provides fire safety and building security products, as well as benefits from its separation of non-building-focused businesses, such as automotive seating and batteries. With all catalysts in sight now nearing completion, and Johnson Controls now a better business for it – with higher recurring revenues and lower capital intensity – we decided to exit our investment to help fund the purchases of Xcel Energy and Atmos Energy.”

9. Humana Inc. (NYSE:HUM)

Citadel Investment Group’s Stake Value: $385,360,000

Percentage of Citadel Investment Group’s 13F Portfolio: 0.07%

Number of Hedge Fund Holders: 66

Humana Inc. (NYSE:HUM) is an American health insurance company. On July 6, Humana Inc. (NYSE:HUM) stock hit an all-time high of $480.79. The company has been supported by higher Medicare Advantage enrollment. In the first quarter of 2022, Ken Griffin’s hedge fund increased its stake in Humana Inc. (NYSE:HUM) by 121%, holding 885,539 shares worth $385.36 million. 

Humana Inc. (NYSE:HUM) on April 21 declared a $0.7875 per share quarterly dividend, in line with previous. The dividend is payable on July 29, to shareholders of the company as of the close of business on June 30. 

On June 16, Loop Capital analyst Joseph France initiated coverage of Humana Inc. (NYSE:HUM) with a Buy rating and a $510 price target. The analyst remains unsure whether Humana Inc. (NYSE:HUM)’s recent gains will last throughout the year. However, he thinks Humana Inc. (NYSE:HUM)’s brand name and growing portfolio will “magnify the value investors find in the senior market”. 

According to Insider Monkey’s Q1 data, 66 hedge funds were bullish on Humana Inc. (NYSE:HUM), with collective stakes exceeding $3 billion. Harris Associates is the largest shareholder of the company, with more than 3 million shares worth $1.3 billion. 

Here is what Oakmark Equity and Income Fund has to say about Humana Inc. (NYSE:HUM) in their Q1 2021 investor letter:

“The third new purchase was Humana, the industry leader and near pure play in the fastest growing sector of managed care, Medicare Advantage. Each year, more seniors choose Medicare Advantage over traditional Medicare due to the compelling combination of lower costs and expanded benefits. Humana’s scale advantages and focus on senior care allow the company to make targeted investments in its members’ health, resulting in fewer unnecessary hospitalizations and lower chronic care costs. Much of these savings are then reinvested in the health plan, resulting in a continuously improving customer value proposition. The company’s brand also resonates well in the marketplace and has helped drive double-digit annual membership growth over the past decade—well above the rest of the industry. Further, we believe Humana has a long runway ahead as it benefits from an aging population and continued conversion of the approximately 60% of seniors who are still enrolled in traditional Medicare. Yet Humana’s shares are currently trading at a nearly 20% discount to the S&P 500 earnings multiple, which we believe doesn’t give the company enough credit for its durable competitive advantages and strong secular growth outlook.”

8. Fortive Corporation (NYSE:FTV)

Citadel Investment Group’s Stake Value: $404,229,000

Percentage of Citadel Investment Group’s 13F Portfolio: 0.08%

Number of Hedge Fund Holders: 43

Fortive Corporation (NYSE:FTV) is a diversified industrial technology conglomerate that is based in Washington. The company operates through Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions segments. Ken Griffin’s Citadel Investment Group owned 6.6 million shares of Fortive Corporation (NYSE:FTV) in Q1 2022, worth $404.2 million, representing 0.08% of the total 13F holdings. The hedge fund strengthened its hold on Fortive Corporation (NYSE:FTV) by 754% in the March quarter. 

On July 8, Barclays analyst Julian Mitchell maintained an Overweight rating on Fortive Corporation (NYSE:FTV) but lowered the price target on the shares to $68 from $74. Most of the second quarter played out broadly as companies expected, but demand is “continuing to soften”, the analyst told investors. He forecasts 25% to 30% of his coverage to cut 2022 earnings outlook. 

According to Insider Monkey’s database, Fortive Corporation (NYSE:FTV) was part of 43 public hedge fund portfolios at the end of Q1 2022, up from 34 funds in the prior quarter. Andreas Halvorsen’s Viking Global is the biggest shareholder of the company, with more than 12 million shares worth $733.18 million. 

In its Q4 2020 investor letter, Argosy Investors highlighted a few stocks and Fortive Corp (NYSE:FTV) was one of them. Here is what the fund said: 

“We’re getting long in the tooth here, so we’ll conclude with an update Fortive (FTV). Fortive completed its spinoff of Vontier, a business that manufactures gas station terminals, smart city traffic lights, a telematics business, and an auto repair tools distribution business, led by CEO Mark Morelli, a well regarded external hire from Columbus McKinnon. My outlook is bright for both Fortive and Vontier, though Vontier is more heavily focused in the automotive sector and faces some multi-year headwinds from any transition to electric vehicles. Vontier is also nearing the end of a large installation cycle in its Gilbarco-Veeder-Root business which makes today’s earnings somewhat higher than they will be a couple years from now. If there is one fact I am confident about, both Fortive and Vontier will look very different three years from now due to their highly effective acquisition and integration processes that leverage Lean (a concept discussed in prior letters).”

7. T-Mobile US, Inc. (NASDAQ:TMUS)

Citadel Investment Group’s Stake Value: $404,271,000

Percentage of Citadel Investment Group’s 13F Portfolio: 0.08%

Number of Hedge Fund Holders: 91

T-Mobile US, Inc. (NASDAQ:TMUS) is an American wireless network operator that specializes in mobile telephony and wireless broadband. The company is one of the major players in the global 5G market. Ken Griffin’s hedge fund increased its T-Mobile US, Inc. (NASDAQ:TMUS) stake by 89% in Q1 2022. The fund owned over 3 million shares of the company, valued at $404.2 million. 

Raymond James analyst Ric Prentiss on July 1 raised the price target on T-Mobile US, Inc. (NASDAQ:TMUS) to $160 from $158 and reaffirmed a Strong Buy rating on the shares. He included $2 billion of assumed spending in Auction 108 for 2.5 GHz “white space” spectrum and raised his expected revenue from the company’s agreement with DISH Network Corporation (NASDAQ:DISH), the analyst told investors.

According to the first quarter database of Insider Monkey, 91 hedge funds were bullish on T-Mobile US, Inc. (NASDAQ:TMUS), up from 86 funds in the preceding quarter. Warren Buffett’s Berkshire Hathaway is one of the biggest shareholders of the company, with 5.2 million shares worth $672.8 million.

In addition to Amazon.com, Inc. (NASDAQ:AMZN), AT&T Inc. (NYSE:T), and Booking Holdings Inc. (NASDAQ:BKNG), T-Mobile US, Inc. (NASDAQ:TMUS) is a notable stock in Ken Griffin’s Q1 portfolio.

Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about T-Mobile US, Inc. (NYSE:TMUS) in its Q4 2021 investor letter:

“As mentioned, the communication services sector has come under some pressure, and irrational pricing competition has negatively impacted wireless industry growth and profitability of late, weighing on T-Mobile. Faced with these headwinds, and with pressure from other wireless carriers and cable companies that could cause the company to cede share in subscriber growth in 2022, we exited our position in the fourth quarter.”

6. Booking Holdings Inc. (NASDAQ:BKNG)

Citadel Investment Group’s Stake Value: $462,081,000

Percentage of Citadel Investment Group’s 13F Portfolio: 0.09%

Number of Hedge Fund Holders: 99

Booking Holdings Inc. (NASDAQ:BKNG) is one of the leading American travel technology firms. The company operates multiple travel metasearch engines like Booking.com, Priceline.com, Agoda.com, Kayak.com, Cheapflights, Rentalcars.com, Momondo, and OpenTable. Ken Griffin’s hedge fund raised its Booking Holdings Inc. (NASDAQ:BKNG) stake by 90% in the first quarter of 2022, holding 196,760 shares worth $462 million. 

Evercore ISI analyst Mark Mahaney on July 7 reaffirmed an Outperform rating on Booking Holdings Inc. (NASDAQ:BKNG) and lowered the price target on the stock to $2,600 from $3,000, citing inflation pressures, “fierce” foreign exchange headwinds, mounting signs of weak consumer demand, and the threat of recession.

Among the hedge funds tracked by Insider Monkey, 99 funds were bullish on Booking Holdings Inc. (NASDAQ:BKNG) at the end of the first quarter of 2022, up from 92 funds in the last quarter. Nicolai Tangen’s Ako Capital is one of the prominent shareholders of the company, with 387,435 shares worth about $910 million. 

Here is what ClearBridge Investments Large Cap Value Strategy has to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q4 2021 investor letter:

“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year, for example, in positioning the portfolio to benefit from a flush consumer eager to return to spending and traveling. New positions included Booking Holdings, an online travel agency with industry-leading margins and a dominant footprint in Europe.”

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Disclosure: None. Citadel’s Wellington Fund Returned 17.5% This Year. Here are its Top 10 Stock Picks is originally published on Insider Monkey.