4 Stocks Ken Griffin Bought Hand Over Fist as the Nasdaq Plunged

It’s been a trying year on Wall Street. Whether you’ve been investing for a year or decades, you’re probably underwater since 2022 began. That’s because the iconic Dow Jones Industrial Average, widely followed S&P 500, and growth stock-driven…

Nasdaq Composite (^IXIC -0.35%), have respectively shed as much as 19%, 24%, and 34% of their value since hitting their record-closing highs. This firmly places the S&P 500 and Nasdaq in a bear market.

However, big declines in the broader market rarely, if ever, scare successful money managers away from putting money to work. Just ask billionaire Ken Griffin of Citadel.

Griffin’s hedge fund had more than $50 billion in assets under management, as of May 2022, and over 11,000 positions at the end of the first quarter, according to Citadel’s Form 13F filing with the Securities and Exchange Commission.  While diversity and hedging — Citadel regularly uses put and call option strategies as hedges on their positions — are keys to Griffin’s success, it’s worth noting that he and his team piled into a number of high-profile stocks during in the first quarter.

What follows are four stocks Ken Griffin bought hand over fist as the Nasdaq plunged.

Bank of America

The first well-known company Ken Griffin piled into as the stock market plunged is money-center giant Bank of America (BAC -1.04%). Though Citadel has owned shares of BofA for more than a decade, the nearly 4.7 million shares purchased in the first quarter increased its stake by a whopping 149%, relative to the number of shares held at the end of 2021.

The most logical explanation behind this increase is Bank of America’s interest rate sensitivity.

With the U.S. inflation rate hitting a 40-year high of 8.6% in May, the Federal Reserve has been left with no choice but to get aggressive with its interest rate hikes. BofA happens to be the most interest-sensitive of the big banks. When interest rates rise, it generates more net-interest income from its outstanding variable-rate loans.

According to the company’s first-quarter earnings presentation, a 100-basis-point parallel shift in the interest rate yield curve was estimated to generate $5.4 billion in added net-interest income over 12 months.  The Fed has already moved 150 basis points, and we’re only halfway through 2022.

The other lure for Bank of America is its digitization efforts. In the past three years, the number of active digital users has grown from 37 million to 42 million. More importantly, total sales completed online or via mobile app rose to 53% in the March-ended quarter from 30% in the comparable quarter three years ago. Digital sales are considerably more cost-effective for bank stocks.


Ken Griffin and his investing team also used the Nasdaq bear market as an opportunity to bulk up Citadel’s position in semiconductor solutions company Broadcom (AVGO -1.88%). Citadel bought more than 325,000 shares in the first quarter, which increased Griffin’s company’s stake by 212% from the end of 2021.

Although semiconductor stocks are cyclical and the winds of a possible recession are blowing, Broadcom does offer a number of competitive advantages that likely enticed Griffin and his team to more than triple Citadel’s stake in the company.

For example, Broadcom’s biggest catalyst is the 5G wireless revolution. Telecom companies are investing billions of dollars to upgrade their wireless infrastructure to handle 5G speeds. That’s great news for Broadcom, which provides 5G wireless chips and other accessories found in next-generation smartphones. Consumers and businesses steadily replacing their devices should fuel Broadcom’s sales growth for years.

Griffin might also be excited about the transparency of Broadcom’s operating cash flow. This is a company that ended 2021 with a record backlog of $14.9 billion, and was…

Continue reading at THE MOTLEY FOOL


Leave a Reply

Your email address will not be published.