Ken Griffin's Citadel Places Big Short Bet Against GSK - Here's What It Means for Investors

Ken Griffin's hedge fund Citadel has placed a £305 million ($390 million) short bet against GSK PLC GSK, marking the largest wager against the UK pharma giant in over a decade, reported the Financial Times.

The position, disclosed to the UK's Financial Conduct Authority, amounts to 0.51% of GSK's outstanding shares.

GSK's Rally Faces A Reality Check

GSK stock has climbed 8.20% in the past month, fueled by a £2 billion ($2.5 billion approx.) stock buyback and strong HIV and cancer drug sales. Yet, it still trails peers.

Over the past five years, GSK shares have declined 17.53%, while the S&P 500 pharmaceutical index has surged 45%. Griffin's short signals skepticism over the company's long-term pipeline, especially as its HIV drugs near a patent cliff.

Read Also: Goldman Sachs Turns Bearish On Vaccine Maker Dynavax Amid Shingles And Hepatitis B Uncertainty

Hedge Funds, Analysts Are Split

This isn't the first time hedge funds have circled GSK. In 2021, activist investor Elliott Management pushed for a leadership shake-up.

Meanwhile, JPMorgan analysts view GSK's latest earnings and guidance as "positive," but question the buyback's timing. Barclays called it "unexpected," while Jefferies deemed it "well received."

Takeaways For Investors

GSK's challenges have led to mixed bets on its future, but investors seeking exposure to Big Pharma without GSK's risks may look at industry leaders like Eli Lilly & Co LLY and Pfizer Inc PFE.

Alternatively, the iShares U.S. Pharmaceuticals ETF IHE and SPDR S&P Pharmaceuticals ETF XPH provide diversified exposure.

With Citadel betting against GSK, the stock could see increased volatility—making it one to watch.

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