Here's What This Hedge Fund Is Doing With $30 Billion

Every quarter, many money managers have to disclose what they've bought and sold via 13F filings. Their latest moves can shine a bright light on smart stock picks.

Today let's look at Citadel, founded and run by Kenneth Griffin. It's one of the biggest hedge fund companies around, with a reportable stock portfolio totaling $30 billion in value as of March 31, 2012.

The company took a big hit of more than 50% back in 2008, but with an impressive 20% gain in 2011, it finally surpassed its pre-crash high.

Interesting developments
So what does Citadel's latest quarterly 13F filing tell us? Here are a few interesting details:

New holdings include ABB Ltd. (NYSE: ABB  ) , the Swiss industrial giant poised to profit as emerging economies get electrified and require its heavy electrical equipment. The company posted double-digit gains in revenue and earnings over the past year, and the stock recently yielded 4.4%.

Among holdings in which Citadel increased its stake was Chesapeake Energy (NYSE: CHK  ) . The primary draw may be its valuation as it hit a 52-week low back in April, cutting back on its production in light of very low natural gas prices. Still, this company has few fans at Fool HQ, with one of my colleagues declaring, "You couldn't pay me to invest in Chesapeake Energy," and another referring to it as "vile" -- due to the behavior of the CEO and board of directors.

Citadel reduced its stake in a lot of companies, including rural telecom Frontier Communications (Nasdaq: FTR  ) . The company, which bought much of Verizon's landline phone business, has been struggling lately with a steep debt load and shrinking customer base, and it even had to cut its dividend. Of course, since its stock has fallen so much, even its reduced dividend is attractive, yielding more than 10% recently. Its bottom line may be in the red, but its top line has been growing at an accelerating pace.

Finally, Citadel unloaded gobs of companies, including Penn West Petroleum (NYSE: PWE  ) and Kodiak Oil & Gas (NYSE: KOG  ) . Penn West, in the oil and gas exploration and production business, has shed nearly 40% over the past year, but it operates in the rich Athabasca oil sands reserves, which is promising. The company has been pressured by the depreciating Canadian dollar and low prices for natural gas, and may suffer more if oil prices fall, too. But over the long run, it's poised to perform well.

Kodiak Oil & Gas, meanwhile, has recently reported blow-out revenue increases and has moved from the red into the black with its earnings. Bears may worry about its steep debt load, but it has been paying that down a bit recently. The company has invested in various shale oil fields, which could pay off well down the road. In the meantime, though, it isn't producing a lot of free cash flow and seems overvalued to some.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13-F forms can be great places to find intriguing candidates for our portfolios.

If you'd enjoy some hefty dividends in your portfolio but are wary of risky monster payouts such as Frontier's, check out this free report from Motley Fool analysts: "Secure Your Future With 9 Rock-Solid Dividend Stocks."

Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Verizon Communications, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Chesapeake Energy. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On June 20, 2012, at 10:34 AM, Kafue wrote:

    "Still, this company has few fans at Fool HQ,..."

    Which speaks volumes about the short-sighted folks at Fool Central.

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