Ken Griffin founded his investment firm, Citadel Investment Group (now Citadel LLC), on November 1, 1990 with $4.2 million in assets under management. Since then, the company has grown into one of the world's largest hedge funds, with some $12 billion in assets under management. The firm relies on:
fundamental research and quantitative analysis to develop ideas that are actionable through proprietary modeling and trading tools
including the application of algorithms and computer code.
The firm's flagship funds took a serious beating during the latest financial crisis, when they lost 50%. However, the firm's key funds, Kensington and Wellington, recovered in the subsequent years, producing returns in excess of 20% in 2011. According to Barron's, Citadel Kensington Global Strategies fund, with a 3-year compound annual return of 29.4%, was ranked 21st on the top 100 list of best performing hedge funds in 2011.
Ken Griffin has a net worth of $3 billion and is ranked 377th on the list of Forbes Billionaires and number 129 in the United States.
Here are Ken Griffin's largest 5 positions that pay dividends:
Apple Inc. (AAPL) was the largest single equity position in Ken Griffin's portfolio in the first quarter, currently valued at nearly $1.36 billion. He also has large call and put options on the stock. Apple is a $532 billion company that sells electronic and mobility products, and software. Its top-selling products include iPhone, iPad, iPod and Mac. These have seen explosive growth over the past several years, which has boosted the company's EPS growth to as much as 65% per year over the past five years. High EPS growth rate is projected to be sustained in the future at 21% per year for the next five years. Apple will start paying a quarterly dividend this quarter. At current prices, the annualized dividend will yield 1.9% on a payout ratio of 26%. Apple's competitors Microsoft (MSFT) and Hewlett-Packard (HPQ) pay dividend yields of 2.6% each, while rival Google (GOOG) does not pay any dividends. At the current price, Apple is selling at a premium relative to Microsoft, Dell and HPQ. The stock is trading at $599.46 a share, up 46% year-to-date. Billionaires David Einhorn, Stephen Mandel, and Jim Simons are also fans of the stock.
Invesco Ltd. (IVZ) is also one of the largest positions in Griffin's Citadel Investment Group portfolio. Based on the number of shares owned in the first quarter of this year, the position is currently valued at $172 million. The stake was increased by 3% in the quarter. Invesco is a $10.3 billion independent investment management company. It pays a dividend yield of 3.1% on a payout ratio of 43%. The company's competitors such as Franklin Resources Inc. (BEN), Legg Mason (LM), T. Rowe Price Group (TROW), and BlackRock, Inc. (BLK) yield 1.1%, 1.7%, 2.2%, and 3.5%, respectively. Propped up by a declining dollar and strict cost discipline, Invesco saw its EPS grow at an average rate of 6% per year over the past five years. A rebound in the equity markets worldwide, improved global investment inflows, and the continued cost-control measures will help spur growth in EPS at an average annual rate of more than 13% for the next half decade. The stock is trading at $22.86 a share, up 11.2% year-to-date. The stock is trading below its peers on average and the company's own historical metrics. The stock is also popular with Andreas Halvorsen, Jonathon Jacobson, and Cliff Asness.
Exxon Mobil (XOM) represents a $164 billion position in Griffin's portfolio, based on the current price. This stake was bolstered by 141% in the first quarter. The company is a U.S.based oil and natural gas giant, with $403 billion in market capitalization. It is the world's largest dividend payer, boasting a dividend yield of 2.7% on a low payout ratio of 28%. Rivals Chevron (CVX) and ConocoPhillips (COP) pay dividend yields of 3.4% and 4.7%, respectively. The company's EPS expanded at an average rate of 5% per year over the past five years. Analysts forecast that its EPS will grow at an average rate of 8.6% per year for the next half decade. Oil prices have rebounded from the recent lows and natural gas prices are expected to bottom next year. Elevated oil prices and a recovery in natural gas should provide support to the company's EPS growth. The company is also embarking on an international exploration quest with new projects in Iraq, Afghanistan, Russia, and potentially in Mexico. Exxon Mobil shares are trading on a forward P/E above that for the integrated oil and gas industry but below the firm's historical ratios. The stock is changing hands at $86.28 a share, flat year-to-date. Billionaires Donald Yacktman and Ken Fisher are bullish about the stock.
Qualcomm's (QCOM) share in Citadel Management Group's holdings is currently valued at almost $131 million. The company is a $96 billion global telecommunication giant that provides digital wireless telecommunications products and services. It pays a dividend yield of 1.8% on a payout ratio of 30%. Competitors Broadcom (BRCM), Texas Instruments (TXN), and Nokia Corporation (NOK) yield 1.2%, 2.4%, and 8.5%, respectively. Alcatel-Lucent (ALU) does not pay dividends. Qualcomm's EPS expanded at an average rate of 13.4% a year over the past five years. Analysts forecast a robust EPS growth averaging nearly 15% per year for the next five years. The company is undergoing a restructuring whereby it will set up a new unit called Qualcomm Technologies, which will be in charge of the firm's R&D, and its product and services businesses, including semiconductors. The parent will manage the licensing division and corporate functions as well as the company's patents. Qualcomm stock is currently changing hands at $56.26 a share, up 2% year-to-date. It has a forward P/E above that of its industry on average. Billionaires Ken Fisher and Stephen Mandel also hold large stakes in the company.
Nordstrom (JWN) is another of dividend-yielding positions in Ken Griffin's portfolio, currently valued at $139 million. The stake was hiked by 809% in the previous quarter. Nordstrom is one of the U.S. leading fashion specialty retailers. It pays a dividend yield of 2.2% on a payout ratio of 34%. Its peer Saks Incorporated (SKS) does not pay any regular dividends, while competitors Bloomingdale's, Inc. and Neiman Marcus, Inc are privately-held businesses. The company was recently downgraded by Citi analysts citing flagging consumer sentiment and an impending consumer slowdown amid a weakening U.S. macro environment and Europe's woes adversely affected tourism. Citi holds that the high-income consumer, accounting for some 50% of spending, will drive the expected consumer slowdown. The Nordstrom stock has a forward P/E slightly below the apparel industry's average forward P/E. The stock is trading at $47.94 a share, up 1.7% year-to-date. The stock is also popular with billionaires Steve Cohen and Jim Simons.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.