• Citadel CEO Ken Griffin favors pharmaceutical and banking stocks
• 2seventy bio declares war on cancer
• Western Alliance Bancorporation remains resilient despite market turbulence
Citadel CEO and hedge fund manager Ken Griffin is one of the richest people in the world with an estimated fortune of $35 billion (as of May 10, 2023). Over the years, Griffin has built a reputation as a successful investor, having started trading while still a student at Harvard, according to Forbes. The asset manager Citadel is now one of the most important market makers and, according to the website, is responsible for every fifth trade on Wall Street.
Due to the success of Griffin and his company, investors always look forward to the investments that the market expert decides to make. This year, Griffin has struck at two companies from different industries, with the second investment in particular likely to surprise.
Cancer therapies in focus: 2seventy bio share
According to TipRanks, the first company in which the star investor has already secured 2,051,053 shares this year and thus a stake of 4.1 percent is the biotech specialist 2seventy bio. As stated on the company’s website, the company’s goal is to fight cancer: “We are focused on discovering and developing new therapies that are transforming the cancer treatment landscape. We combine our deep knowledge of Cancer cell biology and genetics with our understanding of the immune response to cancer to advance our pipeline.”
Achievements in the first quarter of 2023
As per the company’s quarterly report for the first three months of 2023, 2seventy can look back on some successes. For example, the drug Abecma, which is made in partnership with Bristol-Myers Squibb (BMS), generated sales of $118 million in the first quarter, up 26 percent sequentially and one percent year-on-year Plus of 111 percent. Abecma is used as a treatment for multiple myeloma, a cancer of the bones and bone marrow. Based on this success, the company now believes that the upper end of its revenue guidance of $470 million to $570 million can be achieved. The cooperation with BMS is split exactly 50:50, in the first quarter a positive cash flow could already have been achieved with Abecma. Between 2024 and 2025, 2seventy expects the drug to generate between $200 million and $300 million in operating profit.
Partnership with Novo Nordisk
2seventy bio also has a partnership with Novo Nordisk. The two companies are running a joint research program that focuses on in vivo gene editing for the bleeding disorder hemophilia A. According to the quarterly report, a milestone was recently reached here, which involved a milestone payment of USD 15 million from Novo Nordisk to 2seventy.
This is what the 2seventy bio share does
The 2seventy share is also doing well on the stock exchange. The stock, which is listed on the NASDAQ, has already gained 25.8 percent in value since the beginning of the year. All six FactSet analysts covering the stock recommend buying the shares. The median target price of $28.167 is also well above the last closing price of $11.79 (as of May 10, 2023).
Braving Market Turmoil: Western Alliance Bancorporation Stock
The second company that Ken Griffin brought into the portfolio this year comes from the banking sector. However, given the recent turmoil surrounding US regional banks, the stock’s pick may come as a surprise as it is Western Alliance Bancorporation. Year-to-date, Ken Griffin has bought 4,468,967 shares of the financial institution. In total, the star investor has 5,781,968 shares and thus a 5.3 percent stake in the bank, as reported by TipRanks.
Management dismisses report of sale of financial institution
The bank Western Alliance Bancorporation recently came into the public eye in the course of the debate about the banking crisis after the Financial Times reported, citing people familiar with the matter, that the company was considering selling all or part of the financial institution . The stock then fell by almost 40 percent by the close of trading on the NYSE. Western Alliance’s denial, saying the report was “absolutely false,” was not long in coming. Incidentally, Western Alliance Bank is just one of many banks that belong to Western Alliance Bancorporation, such as Bank of Nevada, Bridge Bank and First Independent Bank.
Robust quarterly balance sheet
In mid-April, the bank released robust quarterly results that revealed adjusted net income of $712.2 million. EPS increased to $2.30 from $2.22 in the first quarter of 2022. The preliminary forecasts were thus exceeded in each case. “The flexibility of our diversified, national commercial banking strategy, with a broad range of value-added deposit channels and deep commercial client relationships across a variety of sectors and geographies, have collectively contributed to our firm’s resilience in the face of recent banking industry turmoil,” said Kenneth A. Vecchione, President and CEO quoted in the report.
No unusual outflow of deposits
In early May, Western Alliance announced in another press release in response to the market turmoil that there had been no unusual deposit outflows. Deposits at the end of the quarter were $47.6 billion, up from $48.2 billion on May 1 and $48.8 billion on May 2. The deposits are still safe.
Ken Griffin criticizes deposit guarantee in case of SVB bankruptcy
The banking crisis in the US began with the collapse of the financial group Silvergate Capital, which specializes in cryptocurrencies, in early March, followed later by the bankruptcy of Silicon Valley Bank and the sale of First Republic Bank to JPMorgan. When the Silicon Valley Bank went bankrupt, US Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and the FDIC jointly announced that all deposits are fully protected – including those that exceed the $250,000 covered by the deposit insurance. At the time, Ken Griffin called the Fed’s deposit guarantee a mistake: “The US is supposed to be a capitalist economy, and it’s crumbling before our eyes. There was a loss of financial discipline as the government bailed out depositors completely.” In this context, it would be interesting to see whether Griffin would continue to hold this opinion if the crisis were to spread to Western Alliance Bancorporation after all.
That’s what Western Alliance stock does
The company’s shares are in a difficult position given the rampant uncertainty on the stock exchange. The paper has lost around 54 percent of its value on the NYSE since the beginning of the year. However, analysts remain loyal to the share certificate and seem to continue to believe in the resilience of the bank. Of the 15 FactSet analysts covering the stock, 14 recommend buying it, while one recommends “hold.” The mid-point price target is $57.767, well above the last close of $27.48 (as of May 10, 2023).
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