Ken Griffin Talk at Georgetown: Leaders of Global Finance Speakers Series

Ken Griffin of Citadel was interviewed at Georgetown University McDonough School of Business as part of the Leaders of Global Finance Speakers Series in September last year. 

He talked about how he doesn't think machines will completely dominate the finance industry.  He says that good old fashioned stockpicking won't die because there's so many qualitative aspects of the process that machines can't necessarily do like interacting with management teams, supply chain, competitors, etc.

"Computers will never, in my opinion, replace the judgment and intellect and the ability to connect dots that people do who are world class analysts in equities."

Griffin noted that machine learning is about pattern recognition and cited outlier events such as Brexit and the machines not knowing how to react or trade.  "Machine learning works really well when you have persistent, consistent patterns."

He says one of the keys to success in finance is to work in the industry because you're passionate about it and love it, not just because you want to make money.  This is because if you're just in it for the money, you're competing with people who absolutely love what they do and will work harder than you.

Griffin said that even his best colleagues at Citadel win 53% of the time and lose 47% of the time with their trades.  That's incredibly humbling, especially when that person is used to getting "A's" in all their classes their whole life. 

Regarding the low volatility last year, he thinks it's a part of the business cycle and one that normally comes in the 7th or 8th innings. 

Asked what hedge funds and private equity firms he admired, Griffin said Paul Tudor Jones (Tudor Investment Corp) he's always looked up to, as well as Ed Thorp. 

On the private equity side, he said he has great respect for Blackstone Group and Steve Schwarzmann, as well as Henry Kravis at KKR.

When asked what advice he'd give to people starting their own fund:  "You do not own your business, your business owns you.  #2: The best advice I've ever had in my life: Hire the best people you can possibly hire."

Embedded below is the video of Ken Griffin's talk at Georgetown followed by the Q&A session:

Citadel's Ken Griffin: Valuations Stretched But "Very Constructive" Environment For Stocks

Citadel's founder Ken Griffin made a rare appearance on CNBC.  Citadel started with $4.7 million in 1990 and now manages over $27 billion.  In the interview, he talked about his market views.  He noted, "Valuations are stretched.  We're not in the sort of classic mania that you get at the very end of a bull market."

Using a baseball analogy, Griffin said we're in the 7th inning (out of the usual 9) of this market rally.  That said, he still seemed to believe that there was a "very constructive" environment for stocks given interest rates are still low, there's low inflation, and companies are seeing ok sales growth.

And while the government has been working on a tax cut plan, Griffin noted this sort of reform would be typically reserved for a recession.  So he asks if we really need to cut taxes as much as they're proposing.  That said, he still thinks that lowering and simplifying taxes is a win for keeping America competitive.

Griffin said, "To the extent that this represents fiscal stimulus, this is a late in the business cycle move.  It would be contrary to what you would traditionally do from an economics perspective."

He also touched on one area that he thinks has become very speculative:  "Bitcoin has many of the elements of the tulip mania in Holland."  He thinks many people buying don't understand what they're buying and instead are just reading articles about it going up and up, so he wonders about how this bubble might end.  He did think that the blockchain technology could definitely have practical uses going forward though.

The CNBC host said Citadel was up 11.4% for the year through October in its Wellington fund.  Griffin attributed this to "good old fashioned stockpicking."  He says their entire strategy is finding which companies are outperforming expectations and which are underperforming.  

Embedded below is the video of Griffin's interview

Citadel founder and CEO Ken Griffin on seeking out talent with exceptional problem solving skills from CNBC.

You can also read the transcript of the interview here.

Intangibles of Building a Great Hedge Fund: Ken Griffin, Alex Klabin, Jason Karp (Milken Institute Panel)

At the Milken Institute conference recently, numerous prominent hedge fund managers gathered on a panel entitled: The Intangibles of Building a Great Hedge Fund: People as an Asset Class.

Ken Griffin of Citadel, Alex Klabin of Senator Investment Group, Jason Karp of Tourbillon Capital, and Gideon Berger of Blackstone all took part in the discussion on investing and the hedge fund industry.


Milken Institute Panel: Intangibles of Building a Great Hedge Fund

Here are some select quotes from the panel and the full video is below:

Alex Klabin on what makes a great investor:  "Great investors, in my view, are able to distill complicated ideas / complicated situations down to the one or two things that really matter. And then make an analogy in their head to distill what the core of the investment is."

Ken Griffin on science versus art in investing:  "In every one of our businesses, there's a science and there's an art.  The science is usually caps in the process and hard work that goes behind driving an investment decision.  We'll do thousands of meetings a year, it's as unglamorous as it can be.  But you use it to assimilate information about how a company's progressing, how a business is unfolding or developing.  And if you're really good, you have an idea of what guidance is going to look like, what the quarter's going to look like.  The art comes down to not how well you can do all that work, but how well you can differentiate your idea from what other people perceive reality to be.  And you're successful in this business when you have a differentiated point of view and the market agrees with you when the information that you have becomes known by all ... You need to have the ability to understand: how will other investors respond to this information when it becomes known.  That's the art in the business, and it's a tough art."

Jason Karp on people as an asset class:  "In our industry, people spend more time on stocks than they do on people.  In my 17 years, what I've discovered is that people, if you train them properly, if you invest in them properly, have more duration, yield, and optionality than any stock I've ever purchased."

Jason Karp on what he looks for in hiring:  "One of the things that we screen for is a variable called openness to change.  And it's the single most important variable that we screen for.  It's basically how well you're able to quickly change your mind when you're presented with conflicting information."

Gideon Berger on what he looks for when investing in managers: "Some people are trying to become lifestyle hedge fund managers, and some people are just trying to get rich, and some people love investing.  What are you actually trying to do?  The two things that we focus on the most: 1. the commitment to building the organization and 2. character that suggests we think they can withstand adversity."

Gideon Berger on what they do before investing:  "What we try very hard to do is be very explicit and write down our investment thesis going in.  Why are we making this investment?  Where do we think the edge or opportunity is coming from? If the thesis is playing out, but the investment isn't playing out, that's an opportunity to add to the position.  But if the thesis isn't playing out but you're making money, that's good luck.  Separating why you're making an investment versus results is very important."

Embedded below is the video of the panel from the Milken Institute:


 

Citadel Adds To Acxiom Stake

Ken Griffin's Citadel has filed a 13G with the SEC regarding their position in Acxiom (ACXM).  Per the filing, Citadel now owns 5.1% of the company with over 4 million shares.

They've boosted their position size by over 2.7 million shares since the end of the second quarter.  The filing was required due to activity on September 25th.  ACXM shares have plummeted from $39 earlier this year down to current levels around $16.

Per Google Finance, Acxiom is "an enterprise data, analytics and software-as-a-service company. The Company operates in three segments: Marketing and Data Services, IT Infrastructure Management, and Other Services. The Marketing and Data Services segment includes its global lines of business for customer data integration, consumer insight solutions, marketing management services, and consulting and agency services. The IT Infrastructure Management segment develops and delivers information technology (IT) outsourcing and transformational solutions. The Other Services segment includes the e-mail fulfillment business, the United States risk business, and the United Kingdom fulfillment business. In July 2014, the Company acquired LiveRamp, Inc., a service for onboarding customer data into digital marketing applications."

Citadel Discloses New Stake in Blackhawk Network

Ken Griffin's Citadel has filed a 13G with the SEC regarding shares of Blackhawk Network (HAWK).  Per the filing, Citadel now owns 5.2% of the company with 653,618 shares. 

This is a brand new position for them and the filing was made due to activity on July 22nd.  HAWK completed its spinoff from Safeway (SWY) earlier this year.

You can view more recent portfolio activity from Citadel here.

Per Google Finance, Blackhawk Network is "a prepaid payment network utilizing technology to offer a range of gift cards, other prepaid products and payment services in the United States and 18 other countries. Its product offerings include gift cards, prepaid telecom products and prepaid financial services products (including general purpose reloadable (GPR), cards and its reload network). In addition, it sells physical and electronic gift cards to consumers through both online distributors and its Website, GiftCardMall.com. It offers gift cards from consumer brands, such as Amazon.com, Applebee’s, iTunes, Lowe’s, Macy’s and Starbucks and from payment networks, such as American Express, MasterCard and Visa."

Citadel Ups Position in PHH Corp

Ken Griffin's Citadel has filed an amended 13G with the SEC regarding shares of PHH (PHH).  Per the filing, Citadel now owns 9.6% of the company with over 5.5 million shares.

This marks an increase of over 3.9 million shares in their position size since the end of the first quarter.  The filing was made due to activity on July 8th.  PHH recently said they would repurchase around 35% of shares.

Per Google Finance, PHH is "an outsource provider of mortgage and fleet management services. PHH operates in three segments: Mortgage Production, Mortgage Servicing and Fleet Management Services. The Company provides mortgage banking services to a range of clients, including financial institutions and real estate brokers, throughout the United States. The Company’s mortgage banking activities include originating, purchasing, selling and servicing mortgage loans through its wholly owned subsidiary, PHH Mortgage Corporation and its subsidiaries (collectively PHH Mortgage). It provides commercial fleet management services to corporate clients and government agencies throughout the United States and Canada through its wholly owned subsidiary. In July 2014, PHH sold its Fleet Management Services business, doing business as PHH Arval, to Element Financial Corporation."

Citadel Boosts Global Brass & Copper Stake

Ken Griffin's hedge fund firm Citadel has filed a 13G with the SEC regarding shares of Global Brass & Copper (BRSS).  Per the filing, Citadel has revealed a 5.8% ownership stake in the company with 1,223,190 shares.

This marks a 253% increase in their position size since the end of the second quarter.  The filing was required due to activity on September 26th.

Per Google Finance, Global Brass & Copper "a converter, fabricator, distributor and processor of specialized copper and brass products in North America. The Company operates in three segments: Olin Brass, Chase Brass and A.J. Oster. The Company is engaged in metal melting and casting, rolling, drawing, extruding and stamping to fabricate finished and semi-finished alloy products from processed scrap, copper cathode and other refined metals. The Company’s products include a range of sheet, strip, foil, rod, tube and fabricated metal component products that it sells under the Olin Brass, Chase Brass and A.J. Oster brand names. The Company’s products are used in a range of applications, including the building and housing, munitions, automotive, transportation, coinage, electronics/electrical components, industrial machinery and equipment and general consumer end markets."

Citadel Boosts Pinnacle Entertainment Position

Ken Griffin's hedge fund firm Citadel Investment Group recently filed a 13G with the SEC regarding shares of Pinnacle Entertainment (PNK).  Per the filing, Citadel now owns 4.8% of PNK with 2,795,753 shares.

This marks around a 107% increase in the number of shares owned since the end of the first quarter.  The 13G filing was required due to portfolio activity on July 23rd.

Per Google Finance, Pinnacle Entertainment is "an owner, operator and developer of casinos and related hospitality and entertainment facilities. The Company operates casinos located in Lake Charles, New Orleans and Bossier City, Louisiana (L’Auberge Lake Charles), St. Louis, Missouri (River City Casino and Lumiere Place Casino and Hotels), and southeastern Indiana (Belterra Casino Resort). In addition, it owns and operates a racetrack facility in Cincinnati, Ohio (River Downs). It also owns a 26% stake in Asian Coast Development (Canada), Ltd (ACDL). In January 2011, it completed the purchase of River Downs Racetrack, located in southeast Cincinnati, Ohio."

Citadel Ramps Up Trina Solar Stake

Ken Griffin's hedge fund firm Citadel has filed a 13G with the SEC on shares of Trina Solar (TSL).  Per the filing, Citadel now owns 6.2% of the company with 252,438,400 shares. 

This is a markedly increased position for the hedge fund as they only owned just over 22,000 American Depository Receipts (ADR) of the company back at the end of the third quarter.  This new disclosure was required due to portfolio activity on February 1st.

Per Google Finance, Trina Solar is "an integrated solar-power products manufacturer based in China with a global distribution network covering Europe, North America and Asia. The Company produces standard monocrystalline photovoltaic (PV) modules ranging from 165 Watts to 185 Watts in power output and multicrystalline PV modules ranging from 215 Watts to 240 Watts in power output. Trina sells and markets its products worldwide, including in a number of European countries, such as Germany, Spain and Italy."

Citadel Ramps Up Brinker International Stake

Ken Griffin's investment firm Citadel has filed a 13G with the SEC regarding shares of Brinker International (EAT).  Per the filing, Citadel has disclosed a 5.5% ownership stake in EAT with 4,014,981 shares.

This marks a sizable increase in their stake and the filing was required due to portfolio activity on December 7th.  The number of shares they own has increased by 4,752% since the end of the third quarter as they only held a tiny position then.

Per Google Finance, Brinker International "owns, develops, operates and franchises the Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) restaurant brands."

Citadel Starts Zillow Stake

Ken Griffin's investment firm Citadel Investment Group just filed a 13G with the SEC regarding shares of Zillow (Z).  Per the filing, Citadel has revealed a 6.1% ownership stake in the company with 1,588,436 shares.

This is a brand new position for the firm and the disclosure was required due to portfolio activity on November 19th.  Shares of the real estate information site dropped recently after the company issued disappointing guidance.  Zillow recently announced it would be acquiring HotPads in an effort to broaden its reach in the housing rental space.

As of the end of the third quarter (September 30th), other top institutional holders of Z shares included JAT Capital, Miura Global, Glade Brook Capital, and more.

Per Google Finance, Zillow is "a real estate information marketplace. The Company provides information about homes, real estate listings and mortgages, through its Website and mobile applications, enabling homeowners, buyers, sellers and renters to connect with real estate and mortgage professionals. The Company’s database has more than 100 million United States homes, including homes for sale, homes for rent and homes not currently on the market. Individuals and businesses that use Zillow have updated information on more than 27 million homes and added more than 50 million home photos. These profiles include detailed information about homes, such as property facts, listing information and purchase and sale data."

For those interested, we've also recently posted up some of Citadel's short positions.

Citadel Boosts LSI Corp Stake

Ken Griffin's Citadel Advisors just filed a 13G with the SEC regarding shares of LSI Corporation (LSI).  Per the filing, Citadel has disclosed a 5.5% ownership stake with 30,389,218 shares.

This marks an increase in their position size of 22% as they purchased over 5.4 million shares.  This disclosure was required due to portfolio activity on October 5th.  It's also worth noting that in Citadel's latest 13F, the hedge fund firm also disclosed ownership of both puts and calls on LSI at the end of Q2, though there's no way to know if they still currently hold them.

Per Google Finance, LSI "designs, develops and markets storage and networking semiconductors. The Company offers a portfolio of capabilities, including custom and standard product integrated circuits that are used in hard disk drives, solid state drives, high-speed communications systems, computer servers, storage systems and personal computers. LSI provides products for original equipment manufacturer (OEM), companies, in the server, storage and networking industries."

You can see other SEC filing activity from Citadel here.

Ken Griffin's Citadel Reveals New Marriott Vacations Position

Ken Griffin's Citadel has started a brand new stake in Marriott Vacations (VAC).  Due to a 13G just filed with the SEC, Citadel has revealed a 5% ownership stake in VAC with 1,714,349 shares. 

The filing was made due to portfolio activity on July 18th.  We highlighted back in March how Steve Cohen's SAC Capital was buying VAC.  However, since they move in and out of positions faster than most of the other funds we track, it's hard to say if they still own a stake (and we won't know until mid-August when the latest 13F disclosures are released).  But for now, Citadel has started a new stake in the name.

Per Google Finance, Marriott Vacations is the worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. The Company is also the global developer, marketer and seller of vacation ownership and related products under the Ritz-Carlton Destination Club brand, and it has the right to develop, market and sell whole ownership residential products under the Ritz-Carlton Residences brand."

Citadel Boosts Goodrich Petroleum (GDP) Holdings

Ken Griffin's investment firm Citadel just filed a 13G with the SEC regarding its stake in Goodrich Petroleum (GDP).  Per the filing, Citadel now owns 5.39% of the company with 1,959,806 shares.

This means they've more than doubled their position size since the end of March.  Griffin's firm has been active as of late and we've also detailed some of Citadel's other portfolio moves here.

Per Google Finance, Goodrich Petroleum is "an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas on properties primarily in Northwest Louisiana, East Texas and South Texas. It includes the Haynesville Shale and Cotton Valley Taylor Sand in Northwest Louisiana and East Texas, the Eagle Ford Shale and Buda Lime formations in South Texas and the Tuscaloosa Marine Shale in Southeast Louisiana and Southwest Mississippi. The Company owns interests in 401 producing oil and natural gas wells located in 29 fields in five states."

Ken Griffin's Citadel Boosts Cypress Semiconductor & Hercules Offshore Stakes

Ken Griffin's investment firm Citadel has filed two 13G's with the SEC regarding its positions in Cypress Semiconductor (CY) and Hercules Offshore (HERO).

Cypress Semi

Their 13G filing indicates that Citadel owns a 5.21% stake in the company with 7,941,732 shares.  This marks a 42% increase in their position size since the end of March.  The filing was made due to activity on June 12th.  At the end of March, Citadel also owned various puts and calls on the name as well.

Per Google Finance, Cypress Semiconductor is "delivers high-performance, mixed-signal and programmable solutions. The Company operates in four segments: Consumer and Computation Division, Data Communications Division, Memory Products Division, and Emerging Technologies and Other.

The Company’s offerings include the flagship Programmable System-on-Chip (PSoC) families and derivatives, such as CapSense touch sensing and TrueTouch solutions for touchscreens. The Company is engaged in universal serial bus (USB) controllers, including the West Bridge solution that enhances connectivity and performance in multimedia handsets. In addition the Company operates in static random access memories (SRAMs) memory market and programmable timing devices. It serves markets, including consumer, mobile handsets, computation, data communications, automotive, industrial and military."


Hercules Offshore

Per the filing, Citadel has revealed a 5.08% ownership stake in the company with just over 8 million shares.  This marks around a 15% increase in their position size since the end of March.

It's also worth noting that in Citadel's most recent 13F (detailing positions as of March 31st), they disclosed ownership of various puts and calls on HERO as well.  Citadel's most recent disclosure was made due to portfolio activity on June 12th.

Per Google Finance, Hercules Offshore is "provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry globally. It provides these services to national oil and gas companies, integrated energy companies and independent oil and natural gas operators."


You can view additional recent portfolio activity from Citadel here.

Citadel Boosts Comstock Resources Stake, Starts Tilly's Positiion

Ken Griffin's investment firm Citadel has filed two separate 13G's with the SEC, both regarding purchasing activity.


Comstock Resources (CRK)

First, the hedge fund firm has revealed a 5.5% ownership stake in Comstock Resources (CRK) with 2,625,646 shares.   This marks a 250% increase in their position size since the beginning of the year.  The filing was made due to portfolio activity on May 4th.

Per Google Finance, Comstock Resources is "engaged in the acquisition, development, production and exploration of oil and natural gas. The Company’s oil and gas operations are concentrated in East Texas/North Louisiana, South Texas and West Texas. The Company’s consolidated proved oil and natural gas reserve base is 85% natural gas and 15% crude oil. Its proved reserves are 46% developed on a billion cubic feet equivalent basis as of 2011."


Tilly's (TLYS)

Citadel has also initiated a brand new stake in Tilly's (TLYS).  They've revealed a 7.9% ownership stake in the company with 724,681 shares due to activity on May 4th.  The company just completed its initial public offering (IPO) and so it appears as though Citadel participated in that.

Per Google Finance, Tilly's is "a specialty retailer of West Coast apparel, footwear and accessories. The Company has brands in action sports, music, art and fashion. The Company’s stores are designed to be an extension of its teen and young adult consumers’ lifestyles with a balance of guys and juniors merchandise."

You can check out more of Citadel's portfolio activity here.

Citadel Boosts Stakes in Evercore Partners & OmniVision Technologies

Ken Griffin's hedge fund firm Citadel recently filed two separate 13G's with the SEC. 


Evercore Partners

First, they've increased their position in Evercore Partners (EVR).  The fund now owns 5.6% of the company with 1,612,188 shares.  This marks a 57% increase in their position size since the start of the year.  This disclosure was made due to activity on April 25th.

Ken Griffin was listed as one of the top 25 highest earning hedge fund managers in 2011.

Per Google Finance, Evercore Partners is "an independent investment banking advisory firm. It operates in two segments: Investment Banking and Investment Management. Its Investment Banking segment includes its Advisory services, through which it provides advice to clients on mergers, acquisitions, divestitures and other corporate transactions. It also provides restructuring advice to companies in financial transition, as well as to creditors, shareholders and potential acquirers. It also provides its clients with capital markets advice, underwrites securities offerings and raise funds for financial sponsors."


OmniVision Technologies

Second, Citadel also disclosed a 5.3% ownership stake in OmniVision Technologies (OVTI) with 2,747,057 shares.  This represents a 356% increase in their position size since the fourth quarter of 2011 ended.  Citadel filed with the SEC due to trading on April 30th.

Per Google Finance, Omnivision Technologies is "designs, develops and markets semiconductor image-sensor devices. The Company's main products, image-sensing devices, which it refers to as CameraChip image sensors, capture an image electronically and are used in a number of consumer and commercial mass-market applications. OmniVision’s CameraChip image sensors are manufactured using the complementary metal oxide semiconductor (CMOS), fabrication process and are predominantly single-chip solutions that integrate several distinct functions including image capture, image processing, color processing, signal conversion and output of a fully processed image or video stream."

We've also posted up more recent portfolio activity from Citadel here.

Ken Griffin's Citadel Ramps Up Position in Children's Place Retail Stores

Ken Griffin's hedge fund firm Citadel Investment Group has filed a 13G with the SEC concerning its position in The Children's Place Retail Stores (PLCE).

Per the filing, Citadel now owns 4.7% of the company with 1,152,935 shares. They only owned 417 shares at the end of 2011, so they've certainly been out buying shares in size. The disclosure was filed due to trading activity on April 9th.

Ken Griffin was recently named one of the top 25 highest earning hedge fund managers of 2011.

Per Google Finance, Children's Place is "is a pure-play children's specialty apparel retailer in North America. The Children's Place provides apparel, accessories and shoes for children from newborn to 10 years old. It operates in two segments: the Children's Place United States and the Children's Place Canada. The Company designs, contracts to manufacture and sells merchandise under The Children's Place brand name."

You can also view some additional Citadel portfolio activity here.

Citadel Boosts Position in Ultrapetrol (ULTR)

Ken Griffin's hedge fund firm Citadel recently filed a 13G with the SEC regarding shares of Ultrapetrol (ULTR).

Citadel has disclosed a 4.9% ownership stake in Ultrapetrol (ULTR) with 1,550,689 shares. They've increased their position size by 185,833% over the past two months (they only owned 834 shares at the end of 2011). The SEC filing was made due to trading activity on February 15th.

In other portfolio activity, we also detailed how Citadel boosted its stake in Constant Contact (CTCT) as well.

About Ultrapetrol (ULTR)

Per Google Finance, ULTR is "an industrial shipping company serving the marine transportation needs of clients in the geographic markets. It serves the shipping markets for grain, forest products, minerals, crude oil, petroleum, and refined petroleum products, as well as the offshore oil platform supply market through its operations in three segments of the marine transportation industry: River Business, Offshore Supply Business and Ocean Business. Its River Business, with 591 barges and 30 pushboats, is an owner and operator of river barges and pushboats that transport dry bulk and liquid cargos through the Hidrovia Region of South America, a region with growing agricultural, forest and mineral related exports. Its Offshore Supply Business owns and operates vessels that provide logistical and transportation services for offshore petroleum exploration and production companies, in the North Sea and the coastal waters of Brazil. Its Ocean Business operates nine ocean-going vessels."

Ken Griffin's Citadel Boosts Constant Contact (CTCT) Stake

Ken Griffin's hedge fund firm Citadel recently filed a 13G with the SEC on shares of Constant Contact (CTCT). Citadel now shows a 3.8% ownership stake in CTCT with 1,138,617 shares.

This is an increase in their position size by 1,543% since the end of the third quarter when they only owned 69,271 shares. The regulatory filing was made due to portfolio activity on January 31st, 2012.

Per Google Finance, Constant Contact is "is a provider of on-demand e-mail marketing, social media marketing, event marketing and online survey solutions for small organizations, including small businesses, associations and non-profits. The Company’s e-mail marketing product allows customers to create, send and track e-mail marketing campaigns. Its social media marketing features allow customers to manage and optimize their presence across multiple social media networks."