Last year, billionaire Ken Griffin's Citadel hedge fund returned around $7 billion in profits to its investors. It now looks as if history will repeat itself. An unnamed insider recently revealed to Reuters that Citadel plans to return another $7 billion or so to investors after generating double-digit gains in 2023.
Citadel owns positions in many stocks and exchange-traded funds (ETFs). These are three of the hedge fund's biggest holdings as of Sept. 30.
1. Microsoft
Griffin's fund owned more than 5 million shares of Microsoft (MSFT +1.08%) at the end of the third quarter, valued at roughly $1.6 billion. The tech giant has been a huge winner for Citadel in 2023, with its shares soaring more than 55%.
NASDAQ: MSFT
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In a way, Citadel's position in Microsoft was even greater than those numbers indicate. The hedge fund's second-largest holding at the end of Q3 was Activision Blizzard, with more than 15 million shares of the gaming company valued at over $1.4 billion. Microsoft acquired Activision in October in an all-cash transaction.
It makes sense why Citadel likes Microsoft so much. The company is at the forefront of many of the most important technologies around. Gaming is obviously one of them, especially now that Activision Blizzard is part of Microsoft.
Microsoft is also a top player in artificial intelligence (AI). Its large investment in OpenAI continues to reap benefits. Microsoft has integrated OpenAI's ChatGPT-4 large language model throughout its products. This move helped turbocharge the company's Azure cloud platform growth in its latest quarter.
2. Boston Scientific
Citadel has held shares of Boston Scientific (BSX +0.95%) for years, initiating a position in the medical technology company in 2013. At the end of Q3, the hedge fund owned more than 21 million shares of Boston Scientific, valued at over $1.1 billion.
The stock has delivered a gain of roughly 6x since Citadel first bought shares. It has also been a solid winner in 2023, jumping more than 20%.
NYSE: BSX
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What does Griffin and his team see in Boston Scientific? For one thing, the healthcare markets the company competes in should grow robustly going forward, especially with aging populations. And Boston Scientific has significant exposure to many of the higher-growth markets in the space.
Citadel's investment managers also no doubt view Boston Scientific's continual innovation as a big plus. The company invests in research and development at the high end of its peer group. It's using AI in creative ways to improve medical technology.
In 2023 alone, Boston Scientific launched around 90 new products. About 35% of the company's total revenue is generated by products introduced over the last three years.
3. SPDR S&P 500 ETF Trust
You might be surprised that Citadel's third-largest holding at the end of Q3 (excluding Activision Blizzard) was SPDR S&P 500 ETF Trust (SPY +1.02%). The hedge fund owned more than 2.4 million shares of the index ETF, valued at a little over $1 billion.
The SPDR S&P 500 ETF Trust, or SPY, ranks as the largest S&P 500 ETF in the world, with assets under management topping $446 billion. As its name indicates, the ETF owns positions in all the stocks that make up the S&P 500.
NYSEMKT: SPY
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Citadel won't beat the market by owning SPY. However, 2023 has been a good year for the ETF, with its shares jumping over 21%.
SPY isn't the only S&P 500 ETF in Citadel's portfolio, either. The hedge fund also owns the iShares Core S&P 500 ETF and the Vanguard S&P 500 ETF.
