Ken Griffin is a billionaire hedge fund supervisor and serves as CEO to Citadel Advisors. Based on Citadel’s most up-to-date 13F filing, the agency purchased 18,736,591 shares of Kenvue (NYSE: KVUE) inventory throughout the second quarter — growing its place by 5,848%.
Beneath, I will break down why now might be a profitable time to scoop up shares of Kenvue. Extra importantly, I am going to assess the corporate’s full image and make the case for why this shopper well being enterprise might be a fantastic long-term purchase for the suitable investor.
Why now may be a profitable alternative to purchase Kenvue inventory
Though you is probably not aware of Kenvue by title, I believe you are nicely conscious of the corporate’s main well being manufacturers. Kenvue is the enterprise behind manufacturers similar to Aveeno, Listerine, Zyrtec, Tylenol, Motrin, Benadryl, Neosporin, Neutrogena, Nicorette, Band-Help, and a lot extra.
As flu season nears, Kenvue could witness some seasonal excessive demand ranges for its over-the-counter allergy and chilly therapies.
Picture supply: Getty Photographs.
Some necessary issues to contemplate
Kenvue is a spin-off from Johnson & Johnson and has solely been buying and selling as a stand-alone entity for a bit of greater than a 12 months. Regardless of its restricted buying and selling exercise, I believe the desk under outlining Citadel’s place in Kenvue over the past 12 months may assist make clear a few necessary themes.
| Class | Q2 2023 | Q3 2023 | This fall 2023 | Q1 2024 | Q2 2024 |
|---|---|---|---|---|---|
| Shares owned | 6.6 million | 2.6 million | 2.4 million | 320,000 | 19.1 million |
Information supply: Hedge Observe.
Based on public filings, Citadel purchased 6.6 million shares of Kenvue across the time of its preliminary public providing. However till the second quarter of this 12 months, Griffin and his workforce had been internet sellers of Kenvue inventory.
What may presumably encourage such a large buy after a number of consecutive intervals of promoting?
For starters, Kenvue inventory is down roughly 15% since going public and at the moment trades at a forward price-to-earnings (P/E) a number of under that of the S&P 500. It is attainable that Citadel views Kenvue as a mispriced alternative and thinks the market is overlooking a possible run-up within the inventory following flu season. With that in thoughts, I’d not be shocked if Citadel sees Kenvue as extra of a commerce and never a place with long-term conviction.
However to be honest, Citadel additionally purchased shares in a number of different shopper staples or healthcare-adjacent alternatives throughout the second quarter. For instance, the fund elevated positions in Pfizer, UnitedHealth Group, Clorox, and Humana.
It is completely attainable that Citadel purchased Kenvue as a hedge towards different alternatives in its numerous portfolio.
Is Kenvue inventory a very good purchase proper now?
Whereas I can not say for sure what components influenced Citadel to construct a big place in Kenvue inventory, I do know why I’d personal the inventory.
First off, Kenvue provides a juicy dividend yield of three.8% — about triple the common yield of the S&P 500. To me, Kenvue is a compelling alternative irrespective of the season as a result of the corporate sells merchandise all the time in demand to various levels. This nuance is necessary to understand as a result of few companies within the shopper area can boast such a luxurious. I believe this makes Kenvue notably interesting for passive revenue buyers, as the corporate appears well-positioned to take care of and even elevate its dividend.
Though Kenvue isn’t a conventional progress inventory, I’d not underestimate the corporate’s long-run potential. Kenvue is uniquely positioned as each a defensive and insulated enterprise — one that may sport a degree of resiliency it doesn’t matter what financial circumstances or seasonality traits amongst consumers could appear to be.
For all of those causes, I see Kenvue inventory as a no brainer and assume now is a superb time to purchase shares with the plan to carry for the long run.
Don’t miss this second likelihood at a doubtlessly profitable alternative
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Proper now, we’re issuing “Double Down” alerts for 3 unbelievable corporations, and there is probably not one other likelihood like this anytime quickly.
*Inventory Advisor returns as of October 21, 2024
Adam Spatacco has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Kenvue and Pfizer. The Motley Idiot recommends Johnson & Johnson and UnitedHealth Group and recommends the next choices: lengthy January 2026 $13 calls on Kenvue. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
