Ken Griffin’s Citadel just added 18 million shares of lesser-known consumer health stocks.
Ken Griffin is a billionaire hedge fund manager and CEO of Citadel Advisors. According to Citadel’s latest 13F filing, the company bought 18,736,591 shares of KenVue (KVUE -1.44%) in the second quarter, increasing its position by 5,848%.
Below, we’ll break down why now is a good time to buy Kenvue stock. More importantly, I evaluate the company as a whole and make the case why this consumer health business could be a great long-term buy for the right investor.
Why now is a good time to buy Kenvue stock
You may not be familiar with the Kenvue name, but you’re probably familiar with the company’s leading health brands. Kenvue is the business behind brands such as Aveeno, Listerine, Zyrtec, Tylenol, Motrin, Benadril, Neosporin, Neutrogena, Nicolette and Band-Aid.
As flu season approaches, Kenview may experience a seasonally high demand for over-the-counter allergy and cold remedies.
Image source: Getty Images.
Important points to consider
Kenvue is a spinoff from Johnson & Johnson and has been trading as an independent entity for just over a year. Despite limited trading activity, we think the table below, outlining Citadel’s position in Kenview over the last year, helps highlight some key themes.
Category 2nd quarter 2023 3rd quarter 2023 4th quarter 2023 1st quarter 2024 2nd quarter 2024 Number of shares owned 6.6 million shares 2.6 million shares 2.4 million shares 320,000 shares 19.1 million shares
Data source: HedgeFollow.
Citadel bought 6.6 million shares of Kenview stock around the time of its initial public offering, according to public filings. But by the second quarter of this year, Griffin and his team were net sellers of Kenview stock.
What could cause such a large number of purchases after several consecutive periods of sales?
First, Kenvue’s stock price has fallen about 15% since going public, and it currently trades at a forward price-to-earnings ratio (P/E) below the S&P 500. Citadel may be viewing Kenvue’s pricing as the wrong opportunity, and the market is missing out on the potential for share price gains post-flu season. With that in mind, I wouldn’t be surprised if The Citadel views Kenbue as a trade rather than a long-term commitment position.
But to be fair, Citadel also bought stakes in several other consumer staples and healthcare-related businesses during the second quarter. For example, the fund increased positions in Pfizer, UnitedHealth Group, Clorox, and Humana.
It’s entirely possible that Citadel acquired Kenview as a hedge against other opportunities in its diversified portfolio.
Is Kenvue stock a good buy now?
I can’t say for sure what factors influenced Citadel to take such a large position in Kenview stock, but I can see why I own the stock.
First, Kenvue offers an impressive dividend yield of 3.8%. This is about three times the average yield of the S&P 500. For me, Kenvue is an attractive opportunity regardless of the season because Kenvue sells products that are always in demand to varying degrees. Few companies in the consumer space can boast such luxury, so it’s important to understand this nuance. We think this makes Kenvue a particularly attractive company for passive income investors, as it looks like Kenvue has a good chance of maintaining or increasing its dividend.
Kenvue isn’t a traditional growth stock, but I wouldn’t underestimate the company’s long-term potential. Kenvue is uniquely positioned as a defensive and insulated business, no matter what the economic situation or seasonal trends of shoppers are.
For all of these reasons, I think Kenview stock is a solid buy, and I think now is a great time to buy the stock with plans to hold it for the long term.
Adam Spatako has no position in any stocks mentioned. The Motley Fool has a position in and recommends Kenvue and Pfizer. The Motley Fool recommends Johnson & Johnson and UnitedHealth Group and recommends the following options: Long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.
