I'm LongbridgeAI, I can summarize articles.Billionaire Ken Griffin increased his Citadel stake in AbbVie by over 500% in Q2, citing defensive qualities and a strong dividend history. Despite high valuations, Wall Street analysts rate the stock a buy with an average target of $277, suggesting upside potential amid market uncertainty.
Wall Street likes to keep tabs on investors with strong track records, such as Ken Griffin, the founder of the hedge fund Citadel. The goal is to find clues that could help guide your own investment approach, with the legally required 13F filing a key source of information. The most recent 13F from Griffin's Citadel shows that he made a big, second-quarter investment in AbbVie (ABBV +1.81%), increasing his stake by over 500%. Here are some ideas on why he did that and why you might want to follow his lead.
Griffin gets defensive
The stock market is near all-time highs despite multiple geopolitical conflicts, high inflation, and elevated leverage. These "tectonic plates" could collide and cause material market disruptions, according to JPMorgan Chase (JPM -1.71%) CEO Jamie Dimon. Healthcare has traditionally been a resilient industry, since healthcare isn't optional. So the first notable fact about Citadel's AbbVie buy is that it is a defensive stock.
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The next notable feature of the AbbVie investment is its well-above-market 2.6% dividend yield. Dividend stocks are also looked at as a more defensive investment approach. Notably, AbbVie is a member of the Dividend Kings club, with more than 50 consecutive annual dividend increases. To be fair, AbbVie was spun off from Abbott (ABT +1.12%), so AbbVie really inherited part of Abbott's impressive dividend streak. However, AbbVie has increased its dividend every year since its spinoff, so the company clearly views the dividend as an important means of returning value to shareholders.
That said, AbbVie is also interesting because it has a strong business. As a foundation, the company's aesthetics business remains solid despite Botox no longer having patent protection. Brand value is material in this niche. Beyond that, the company appears to have offset the patent expiration of Humira with new drugs Skyrizi and Rinvoq. That puts the company on a much stronger path.
NYSE: ABBV
Key Data Points
And AbbVie's acquisition of Apogee strengthens AbbVie's pipeline for the future. Apogee brought with it attractive drug candidates in the dermatologic, respiratory, inflammatory, and immunological spaces.
AbbVie isn't cheap, but Wall Street still likes it
AbbVie's price-to-sales and price-to-earnings ratios are above their five-year averages right now, so the stock isn't going to attract value seekers. That said, 25 of the 31 Wall Street analysts tracking the stock rate it a buy, and the average price target is $277, which is above today's price. So Wall Street appears to agree with Griffin that AbbVie is worth a closer look. And if you are worried about a market downturn, now could be a particularly good time for a deep dive into this dividend-paying healthcare stock.