Ken Griffin is a billionaire hedge fund manager and serves as CEO to Citadel Advisors. According to Citadel's most recent 13F filing, the firm bought 18,736,591 shares of Kenvue (KVUE -0.88%) stock during the second quarter -- increasing its position by 5,848%.
Below, I'm going to break down why now could be a lucrative time to scoop up shares of Kenvue. More importantly, I'll assess the company's full picture and make the case for why this consumer health business could be a great long-term buy for the right investor.
Why now might be a lucrative opportunity to buy Kenvue stock
Although you may not be familiar with Kenvue by name, I suspect you're well aware of the company's leading health brands. Kenvue is the business behind brands such as Aveeno, Listerine, Zyrtec, Tylenol, Motrin, Benadryl, Neosporin, Neutrogena, Nicorette, Band-Aid, and so much more.
As flu season nears, Kenvue may witness some seasonal high demand levels for its over-the-counter allergy and cold treatments.
Image source: Getty Images.
Some important things to consider
Kenvue is a spin-off from Johnson & Johnson and has only been trading as a stand-alone entity for a little more than a year. Despite its limited trading activity, I think the table below outlining Citadel's position in Kenvue over the last year could help shed light on a couple of important themes.
| Category | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 |
|---|---|---|---|---|---|
| Shares owned | 6.6 million | 2.6 million | 2.4 million | 320,000 | 19.1 million |
Data source: Hedge Follow.
According to public filings, Citadel bought 6.6 million shares of Kenvue around the time of its initial public offering. But until the second quarter of this year, Griffin and his team had been net sellers of Kenvue stock.
What could possibly inspire such a massive purchase after several consecutive periods of selling?
For starters, Kenvue stock is down roughly 15% since going public and currently trades at a forward price-to-earnings (P/E) multiple below that of the S&P 500. It's possible that Citadel views Kenvue as a mispriced opportunity and thinks the market is overlooking a potential run-up in the stock following flu season. With that in mind, I would not be surprised if Citadel sees Kenvue as more of a trade and not a position with long-term conviction.
But to be fair, Citadel also bought shares in several other consumer staples or healthcare-adjacent opportunities during the second quarter. For example, the fund increased positions in Pfizer, UnitedHealth Group, Clorox, and Humana.
It's entirely possible that Citadel bought Kenvue as a hedge against other opportunities in its diverse portfolio.
Is Kenvue stock a good buy right now?
While I can't say for certain what factors influenced Citadel to build a large position in Kenvue stock, I know why I would own the stock.
First off, Kenvue offers a juicy dividend yield of 3.8% -- about triple the average yield of the S&P 500. To me, Kenvue is a compelling opportunity no matter the season because the company sells products always in demand to varying degrees. This nuance is important to appreciate because few businesses in the consumer space can boast such a luxury. I think this makes Kenvue particularly appealing for passive income investors, as the company looks well-positioned to maintain or even raise its dividend.
Even though Kenvue is not a traditional growth stock, I would not underestimate the company's long-run potential. Kenvue is uniquely positioned as both a defensive and insulated business -- one that can sport a level of resiliency no matter what economic conditions or seasonality trends among shoppers may look like.
For all of these reasons, I see Kenvue stock as a no-brainer and think now is a great time to buy shares with the plan to hold for the long term.
