Notable Hedge Fund Manager Ken Griffin Increases Stake in Pharmaceutical Giant
Every quarter, prominent hedge funds with over $100 million in assets under management are required to submit a Form 13F to the Securities and Exchange Commission (SEC). This filing provides valuable insights into the investment strategies of these firms, revealing which stocks they’ve bought and sold during the previous quarter. One such notable investor is Ken Griffin, the billionaire CEO of Citadel, a leading hedge fund.
In the latest filing, Citadel disclosed a significant increase in its stake in pharmaceutical giant Pfizer, purchasing 7.9 million shares and boosting its holding by 63%. This move is intriguing, given Pfizer’s tumultuous performance over the past few years. Despite posting break-even returns in 2024, the company’s stock has plummeted by over 30% in the last three years.
Several factors have contributed to Pfizer’s struggling stock price. The decline in demand for its COVID-19 treatments, Comirnaty and Paxlovid, has led to a noticeable slowdown in revenue growth since 2022. Additionally, the company’s acquisition of oncology specialist Seagen for $43 billion in December 2023 will take time to integrate and generate returns. Furthermore, Pfizer faces patent challenges on several of its blockbuster drugs, including Eliquis, Ibrance, Prevnar 13, and Xtandi, which could result in significant revenue losses.
Despite these challenges, Pfizer is exploring opportunities in the lucrative weight loss market. The company’s GLP-1 candidate, Danuglipron, has shown promise in clinical trials, and the global market for GLP-1 agonists is expected to reach $100 billion by 2030. While Pfizer lags behind leaders Novo Nordisk and Eli Lilly in this space, its entry could potentially offset declining sales from other medications.
Citadel’s increased stake in Pfizer may be driven by the company’s undervalued stock, currently trading at a forward price-to-earnings multiple of 10.8, significantly lower than the S&P 500 index’s forward P/E multiple of 23.2. The potential gains from Danuglipron and growth from Seagen could outweigh losses from other medications in the long term, making Pfizer an attractive investment opportunity.
However, it’s essential to acknowledge the uncertainties surrounding Pfizer’s business, including the timeline for integrating Seagen and the regulatory hurdles facing Danuglipron. Investors should exercise caution and consider these factors before investing in Pfizer.
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