Hedge fund founder of Citadel Ken Griffin did not stake his claim as the wealthiest man in Illinois, by Forbes’ reckoning, without playing it smart. Having once asserted, “Every organization has two choices. Choice one is to grow. Choice two is to die. If you decide not to grow, it’s a clear-cut message to talented people that it’s time to leave,” from Griffin’s eyes “risk is what you make of it”- and one he is willing to take, should the research back it.
Shrewdly tapping into the field of technology, with Citadel leading other firms in these tech-savvy strategies helped Griffin’s Chicago-based hedge fund now leap from $4.2 million in assets in 1990 to now beyond $26 billion.
Griffin is no newbie to the twists and turns of trading, having cashed in on the market’s downturn spin in 1987, which is precisely how he collected his first million. Though Citadel’s investment team had to grapple amid rings of investor fire after a close call for total collapse in 2008, the billionaire looked to technology tools and held steadfast to new investment constraints to return his firm to a state even more brazen than its former glory.
So how do Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Gilead Sciences, Inc. (NASDAQ:GILD), and Apple Inc. (NASDAQ:AAPL) fare from Griffin’s prudent eyes? Let’s dive in to the famed hedge fund manager’s latest moves:
Valeant Pharmaceuticals Intl Inc
Valeant continues to gamble in a race against time and dollars, with shackles of debt nipping at its heels. Can the troubled biotech giant ease off its debt load, or is it doomed to fall prey to a waning business model and a steeply rising financial cliff?
Citadel seems to edge towards the latter, having relinquished 48% of its holding in Valeant, leaving 1,774,482 shares left worth $25,765K, according to the most recent SEC filing.
When looking at the writing on the wall, perhaps Griffin has the right cautious mindset spinning, as Valeant’s future weighs delicately in the balance. The troubled giant’s revenues are to see a 6 to 8% dip this year alone, which does not take under account last year’s already 7% plunge.
Though VRX hoped in 2016 to sell off assets securing $8 billion to feed the debt demons, truthfully, the band-aid the VRX team have secured is just over $2 billion in sales presently. This does not change the ghost of 2020 that still haunts the giant in the distance with a debt burden lingering at a stinging price tag of $30 billion; $2 billion down, but $28 more billion to go. As such, Citadel could be wise to play it on the tepid side.
TipRanks analytics exhibit VRX as a Hold. Out of 15 analysts polled by TipRanks in the last 3 months, 3 are bullish on Valeant stock, 9 remain sidelined, and 3 are bearish on the stock. With a return potential of 43%, the stock’s consensus target price stands at $15.36.
Gilead Sciences, Inc.
Gilead has been giving rise to angst-filled shareholders who are not pleased with the biotech giant’s HCV half of the business, which has fallen 33% in these past two years and has stung as the root of GILD’s underperformance compared to the rest of the market. Yet, Griffin remains not just undaunted by negative investor sentiment, but in fact spotlights massive potential ahead.
Just consider the latest SEC filing, where Citadel boosted 814% of its holding in Gilead to 405,895 shares, now worth $29,066K. Clinically, Gilead gets physician backing approval, as its safety and efficacy levels are unparalleled, thanks to Epclusa, which got the green light just last year for treating adult patients with chronic hepatitis C virus (HCV) both with and without cirrhosis (advanced liver disease).
GILD’s HCV problems lie in revenue strain, with sales continuing their plunge. There is a large market for HCV patients, with willing buyers- but also with fierce competition, leading prices to have scaled back by 60%+. Thus, revenue certainly has seen the effects of Gilead trying to compete.
However, Gilead has some sizzling potential in its key nonalcoholic steatohepatitis (NASH) therapy pipeline on the HIV spectrum of the GILD equation, along with rumblings for a strategic M&A, perhaps taking a smaller biotech firm like Kite Pharma under wing. Clearly, Citadel is willing to brave the HCV slack for the long-term reward.
TipRanks analytics demonstrate GILD as a Buy. Based on 18 analysts polled by TipRanks in the last 3 months, 12 rate a Buy on Gilead stock and 6 remain sidelined. The 12-month average price target stands at $81.73, marking a 20% upside from where the stock is currently trading.
Apple’s new revamped model of the iPad- dubbed a simple “iPad”- is a lightly enhanced iPad Air 2, released at the end of 2014. Investors have been waiting for months to see a big launch event, which though never transpired, the upgrade is being introduced to a tech enthusiast public nonetheless.
Meanwhile, the tech giant is hitting the refresh button in more ways than one, with twice the storage for all iPhone SEs as well as new special red editions of both the iPhone 7 and iPhone 7 Plus, benefiting Apple’s collaboration with AIDS-fighting organization RED.
However, Citadel cut back on its holding in Apple by 12% to $262,566K. There are some fears that while the new iPad product line could initially lift sales performance, average selling prices could take a dip as a result. Right now, the Apple machine revolves largely around the iPhone, and for iPads to go back to a starring role, future higher-end editions are needed with enticing features that could garner eager consumers ready to spend with cash on hand.
TipRanks analytics show AAPL as a Buy. Out of 36 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock, 6 remain sidelined, and 2 are bearish on the stock. With a return potential of 6%, the stock’s consensus target price stands at 6%.