Citadel Advisors, run by famed hedge fund manager Kenneth Griffin, has revealed in a Form 13F Filing that it owned 752,449 shares of Forest Laboratories, Inc. (NYSE:FRX) which was acquired by Actavis plc (NYSE:ACT) in July this year.
“This filing lists securities holdings reported only form 13 F filed on May 15, 2014, pursuant to a request for confidential treatment that expired on August 14, 2014,” says the filing, which valued the holding at $69.43 million, or about $92.27 per share.
Citadel’s Holdings of Forest Laboratories in March 2014
A reference to Citadel’s 13F activity as on March 31, 2014 reveals that the fund had a massive portfolio value of $72.58 billion.
As on that date, holdings in the erstwhile Forest Laboratories, Inc. (NYSE:FRX) amounted to 765,717 shares with a market value of roughly $ 70.65 million. During the quarter, the fund had reduced its holdings in Forest Laboratories by 77% by selling 2,613,765 shares.
Presumably, the fund cashed in most of the gains that accrued after the announcement of the acquisition of Forest Laboratories by Actavis plc (NYSE:ACT) in February 2014.
Considering that the acquisition price paid to Forest Laboratories, Inc. (NYSE:FRX) is about $94 a share, Citadel is just marginally ahead on its May 2014 purchase of the stock.
Confidential filing by hedge funds
Hedge funds often resort to a confidential filing in form 13F when they fear that a public disclosure would cause the price of the stock to run up before they can complete their purchases in the market.
A survey of such confidential filings, covered by ValueWalk here, found that “securities which are kept confidential at the time of the original 13F filing earn positive and significant abnormal returns over the post-filing confidential period; i.e., from the time of the original 13F filing up until the time that the confidential positions are ultimately revealed to the public through a 13F Amendment filing.”
The survey covered 250 hedge fund managers filing Form 13F during 1999 through 2006. It also found that an increase in the percentage of confidential securities from 0% to 25% associated with a significant increase in subsequent monthly portfolio returns of about 50 basis points.
Citadel is one of the world’s biggest alternative asset managers as well as a major market maker and options specialist. Harvard-educated Kenneth Griffin is founder and CEO of Citadel. Watch this rare interview of Griffin and Blackstone Chairman, CEO and Co-Founder Stephen Schwarzman here.