Billionaire Ken Griffin Enters These 3 ‘Strong Buy’ Actions

Billionaire Ken Griffin Enters These 3 ‘Strong Buy’ Actions

As fears of high inflation and the threat of recession become the talk of the town, investors are turning to Wall Street titans for guidance, namely Ken Griffin. Founding the Citadel hedge fund in 1990, the company now has more than $50 billion in assets under management.

At age 19, a sophomore at Harvard University, Griffin began trading in his dorm room with a fax machine, computer, and telephone. Now the Citadel CEO, whose net worth is $27 billion, is known as one of Wall Street’s greats. Looking at the fund’s performance in 2022, it becomes even clearer why Griffin has legendary status.

Unlike the average hedge fund, which had a negative return of 4.54% in the first seven months of 2022, Citadel’s flagship Wellington fund saw its returns grow by 21% over the same period.

With that in mind, we wanted to take a closer look at three stocks that Citadel recently purchased. Using the TipRanks database, we found that each ticker earned a consensus rating of “Strong Buy” from the analyst community. Not to mention that all three have a lot of upside potential.

Ranger oil (ROCC)

We will start with an independent producer of hydrocarbons based in Houston, Texas, Ranger Oil. Ranger operates in the Eagle Ford shale formation in South Texas, where its holdings produced 38,500 barrels of oil equivalent daily in the last quarter, 2Q22. Of that total production, Ranger saw crude oil sales totaling 27,500 barrels a day.

These are solid production numbers for a small independent oil company and generated $314.5 million in revenue for Ranger in the second quarter. The company posted net income, based on that revenue, of $71.18 million, a sharp turnaround from the first quarter loss of $9.98 million and well above the $3.04 million in earnings generated in the previous quarter. 2Q21.

This pattern also applies to EPS. In the same quarter last year, the company posted earnings of 20 cents per share, which dropped to an EPS loss of 47 cents in 1Q22. In the second quarter of this year, diluted EPS reached $3.33.

Ranger has benefited from rising prices in the oil and natural gas markets. The company produces and sells crude oil, natural gas liquids and natural gas – and prices for all three have increased in the last 12 months, even though they represent a recent pullback.

This company maintains an active policy of returning capital to shareholders, through a small dividend and a larger share buyback program. The company’s board has authorized up to $140 million in buybacks through June of next year and, since the program began last May, has returned about $46 million to shareholders.

Ken Griffin saw fit to buy the ROCC with the purchase of 100,845 shares. This opening position in the company is currently worth $4.1 million.

Griffin is far from the only bull here. 5-star analyst Neal Dingmann at Truist covers this action and writes: “ROCC is one of the few small cap E&Ps that we believe is able to rely on share buybacks when the market presents opportunities while simultaneously increasing production by two digits…. We believe the strong operations/financial mix offers a unique investment, especially in today’s highly discounted relative valuation. We anticipate solid production/earnings/FCF growth in the latter part of the year, which should decline well into 2023 for a strong setup.”

Not only does Dingmann chart a bullish path for the company, he backs it up with a buy rating and price target of $71. Following that target, the stock is expected to rise ~76% more over the span of a year. (To see Dingmann’s history, Click here)

Overall, there are 3 recent analyst reviews for this stock, and all are positive – making the Strong Buy analyst consensus unanimous. The stock is currently trading at $40.66, and its average price target of $58.33 implies an upside potential of ~44% over the next 12 months. (See ROCC stock forecast on TipRanks)

Skechers USA (SKX)

Now let’s turn to footwear and look at the Skechers. This company was founded in 1992 and over the past 30 years has grown into one of the biggest sports shoe brands in the US. Branding itself as ‘the comfort technology company’, Skechers offers a wide range of shoes, sandals, flip-flops and other footwear, for any purpose under the sun.

Skechers ended the second quarter with some mixed numbers. The company posted a 12% year-over-year gain in revenue to a quarterly record of $1.87 billion. That total included an 18% gain in wholesale sales and a more modest 4% gain in direct-to-consumer sales. The company’s earnings, however, came in at 58 cents per diluted share, down from 88 cents in the same quarter last year.

Skechers said it had $946.4 million in cash and liquid assets available at the end of the second quarter, and year-to-date completed share buybacks totaling $49.2 million, or 1.3 million shares. At the end of the quarter, the company still had $450.8 million remaining in its authorized share buyback program.

Reflecting a new position for Griffin’s Citadel, the fund pulled the trigger on 455,696 shares in the second quarter. As for the value of this participation, it reaches US$ 17.77 million.

Morgan Stanley analyst Alexandra Straton is unabashedly bullish on SKX, saying, ‘Run, don’t walk, for another look at this stock.’ Getting to the nitty-gritty, Straton goes on to say, “In our opinion, SKX is one of the few companies in our coverage with 1) room for positive EPS reviews, 2) a clear opportunity for valuation re-rating, and 3) that could benefit from a macroeconomic downturn due to its focus on value.”

Straton’s view naturally leads to an overweight rating (ie, buy) on SKX stock and a target price of $59, which implies a 51% upside potential over a year’s horizon. (To watch Straton’s history, Click here)

Skechers has clearly piqued Street’s interest – there are 9 recent analyst reviews here, all positive, supporting a unanimous strong buy consensus rating. The stock is trading at $38.99 and its average price target of $50.33 suggests a 12-month high of 29%. (See Skechers stock forecast on TipRanks)

Therapeutic Bike (BCYC)

The last action we will see is in the biopharmaceutical sector. Bicycle Therapeutics is using a new platform to develop a new class of precision-guided, synthetic therapeutic agents for the treatment of solid tumor cancers that are currently intractable. The therapeutic agents are based on Bicycles, a short, fully synthetic peptide molecule that structurally forms two loops to maintain stability. They represent a new – and unique – therapeutic class that combines the pharmacokinetic advantages of small molecules with the pharmacological advantages of biologics.

Most of Bicycle’s drug candidates are in early stages, and the company announced in June this year that it had dosed the first patients in its clinical trial expansion cohort to candidate BT5528, a targeted second-generation Bicycle Toxin Conjugate (BTC). to EphA2. This is a Phase I/II study, set to enroll up to 56 patients with the clinical trial starting during the third trimester.

Bicycle also has early stage clinical trials underway for BT7480 and BT8009. Again, both are precision therapies designed to target solid tumors. The 7480 is currently undergoing a Phase I/II clinical trial, as is the 8009. Earlier this year, Bicycle announced positive Phase I data on the 8009, which warranted further studies. The company currently has 37 patients dosed in the Phase I/II study of BT8009.

Bicycle is lucky and receives collaboration fees and payments from development partners in its operations. In the second quarter, these payments totaled $4.37 million, up from $1.78 million in the year-ago quarter.

This biopharmaceutical features a unique development platform and clinical program in the early stages of take-off – all of which caught the attention of Ken Griffin. His company bought 243,334 shares of the company in the second quarter, which are now valued at $6.5 million.

JMP analyst Reni Benjamin would agree that this action deserves closer scrutiny. He writes of Bicycle: “With three products in the clinic advancing through dose variation studies or already in Phase 2, market-moving data over the next 12 months, and a strong cash position of $392.6 million ( pro forma), we believe Bicycle stocks represent a unique buying opportunity given recent weakness across the biotech sector.”

Benjamin uses his feedback to support his Outperform rating (ie, buy), and his $70 price target shows the extent of his confidence: a 172% lead over the next year. (To see Maughan’s background, Click here)

Once again, we’re looking here at a stock with a strong unanimous analyst consensus to buy – this one based on 7 recent positive reviews. The shares have a trading price of $26.71 and an average target of $57.14, for 114% upside potential in one year. (See bike inventory forecast on TipRanks)

To find good stock trading ideas with compelling valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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