If you are an investor looking for new long-term investments opportunities, examining the latest moves of large hedge fund and institutional investment managers should be part of your research process.
This doesn’t mean you should necessarily follow these funds’ moves exactly, but it can give you a sense of where the market might be headed. Hedge fund giants like Ken Griffin, the founder and CEO of Citadel, have much more money and resources, not to mention experience and expertise, than the average investor, so they may see things you don’t.
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The decisions they make aren’t always right, but their moves can certainly help inform your portfolio decisions.
There are a couple of moves that Griffin made at Citadel during the second quarter that really jumped out for me. One of them involved AbbVie (NYSE: ABBV), the pharmaceutical company.
Betting big on AbbVie
It was not just AbbVie; it was also the company that AbbVie spun out of 13 years ago, Abbott Laboratories (NYSE: ABT).
These were Griffin’s two biggest adds in Q2. He bought 2.7 million shares of AbbVie, a 546% increase from the previous quarter, and added 6.7 million shares of Abbott, a 349% increase from Q1. And the third-biggest individual equity add was Eli Lilly (NYSE: LLY), which he boosted 291%.
This tells me two things — one, he is making defensive moves into healthcare stocks, which tend to perform well during market downturns. Healthcare is a necessity, no matter the economy or market. In 2022, for example, AbbVie and Eli Lilly had total returns of 24% and 34%, respectively, crushing the market. Abbott, however, was down 20% that year, about equal to the S&P 500.
Two, it tells me that Griffin is seeking out reliable, high-yield dividend stocks to generate additional income or total return.
The reason is that he likely sees sluggish and volatile markets ahead, given the state of the economy and the overvalued S&P 500. These stocks will provide stability and downside protection.
A Dividend King
AbbVie is one of the best dividend stocks you can buy. The pharmaceutical company is a Dividend King, meaning it has more than 50 consecutive years of dividend increases. While AbbVie has only been around 13 years, when you add its years as part of Abbott, it has boosted its dividend for 54 straight years. So has Abbott, for that matter.
