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Ken Griffin founded Citadel Investment Group in 1990, however his career actually began three years before that when he started trading bonds out of his Harvard dorm room. During that time, Griffin also served as the general partner, overseeing the investment and trading activities for two limited partnerships, before going to work briefly for Frank Meyer’s Glenwood Capital Investments.

Griffin first came to the broader attention of the investments markets when, in 2001, he decided his fund would benefit from increased media exposure and he allowed a feature story about his history as a fund manager to be published in “Institutional Investor.” The tagline for the story read: “Just 32, he wants to run the world's biggest and best hedge fund. He's nearly there." Today, Griffin’s Citadel Investment is one of the largest funds in the world; it has grown to portfolio worth almost $43 billion.

Griffin’s strategy is to look distressed or unpopular assets while maintaining a heavy focus on options. Griffin typically holds call positions, that is those that allow him to purchase a position in the future at a determined price, in the same companies he holds put positions, that is those that allow him to sell at a predetermined price in the future.

Company

Ticker

Value (x1000)

Activity

APPLE INC Puts

AAPL

1044504

-20%

APPLE INC Calls

AAPL

967367

-2%

GOOGLE INC Puts

GOOG

425967

-39%

GOOGLE INC Calls

GOOG

425410

-10%

E TRADE FINANCIAL CORP

ETFC

378109

12%

FRANKLIN RESOURCES INC

BEN

226377

307%

NETFLIX INC Puts

NFLX

214933

13%

APPLE INC

AAPL

210894

-68%

METLIFE INC

MET

209804

0%

P N C FINANCIAL

PNC

201809

-8%

ROSS STORES INC

ROST

200551

1%

AMERICAN EXPRESS CO

AXP

194210

13%

EBAY INC

EBAY

189215

9620%

PRICELINE COM INC Puts

PCLN

183885

-29%

PRICELINE COM INC Calls

PCLN

182913

-16%

E N S C O PLC

ESV

182299

-3%

NETFLIX INC Calls

NFLX

181887

2%

CITIGROUP INC

C

181092

-22%

AMAZON COM Calls

AMZN

175902

28%

KEYCORP NEW

KEY

174216

194%

AMAZON COM Puts

AMZN

159318

-0%

COLGATE PALMOLIVE CO

CL

154099

2737%

NEWS CORP

NWSA

144833

83%

X L GROUP PLC

XL

144511

72%

HOME DEPOT INC

HD

140581

8%

IBM Calls

IBM

139916

58%

NATIONAL OILWELL VARCO

NOV

134152

33%

ANADARKO PETROLEUM

APC

130810

51%

C M E GROUP INC

CME

129362

1%

QUALCOMM INC

QCOM

128960

197%

IBM Puts

IBM]

128268

18%

BROADCOM CORP

BRCM

127117

34%

This strategy has served him well so far this quarter. His top positions have just about broke even, while the S&P 500 has been lost several percentage points.

Griffin carries a put position in Apple Inc (NASDAQ:AAPL) worth $1.04 billion, offset with a call position worth over $967 million. He also owns almost $211 million in Apple shares after decreasing his regular position in the company by 68% last quarter. Apple is a strong performer, producing a 23.2% return since June, even after a temporary downturn after Steve Jobs announced his resignation in late August (read the story here). Its performance has made several hedge fund managers very happy because it is the most popular stock amongst hedge funds (See the complete list here).

Google Inc (NASDAQ:GOOG) is also one of the top stocks amongst fund managers and it is certainly popular with Griffin, at least as far as options go. Griffin owns puts worth $425 million in the company and calls worth just $500,000 less than that. Google’s performance so far this quarter is not as high as Apple, but it is still significant, returning almost 8% since the end of last quarter.

Ken Griffin was very bullish about tech stocks and that served him well during the recent market turmoil. EBAY returned 1.4%, PCLN gained 4.9%, AMZN gained 14.1%, IBM returned 2.3%, and BRCM gained 6.7% despite the 8.5% decline in the S&P 500 ETF (NYSEARCA:SPY).

We like Griffin. He certainly seems to know his stuff and he has a strong track record. The one caveat is that, for the individual investor, options as investments may not be a possibility. Private investors are cautioned that put and call positions operate differently than traditional stocks. As such, mirroring Griffin’s top choices will only work as well if you have access to buying stock options and can do so at a good price.

Source: Billionaire Ken Griffin's Top Stock Picks