Citadel's Ken Griffin Invests $124M in Medicare Advantage Firm Days Before Its Victory in Ratings Case

Billionaire investor Kenneth C Griffin runs one of the most successful hedge funds in the world. As the founder and CEO of Citadel Advisors with a majority stake, Griffin has a net worth of £35.69 billion ($48.3 billion).

Griffin is known for his open-mindedness to diverse asset classes and love for math, evident from his quantitative investing approach, which helped Citadel generate over £54.68 billion ($74 billion) in net gains since its inception in 1990.

While the hedge fund manager could be more vocal about his investing strategies, his approach reveals patterns of high-frequency trades backed by complex algorithms.

In his latest stock trade, Griffin purchased 9.11 million shares of Alignment Healthcare (NASDAQ:ALHC) at an average price of £10.06 ($13.61) per share on 2nd July, bumping his stake in the company to a total of 9.35 million shares.

His £91.60 million ($123.98 million) investment in the tech-enabled Medicare Advantage company that offers senior-focused healthcare solutions came days before it secured a partial victory in a legal battle against the Centers for Medicare and Medicaid Services (CMS) over Medicare Advantage star ratings.

In January, Alignment sued the CMS, claiming that regulators made an error in calculating the quality scores of some of its Arizona health plans, which drove down their scores. The CMS scores Medicare Advantage plans on a scale of 1 to 5 stars based on diverse factors. The ratings help seniors compare coverage.

According to an 8th July press release, Alignment Healthcare said that DC District Court judge Christopher Cooper noted in a June ruling that the CMS erred in reviewing member appeals of coverage determinations. The CMS improperly factored two appeals into the rating of one of Alignment's HMO plans, which was sent back to the CMS for rescoring. Recalculation resulted in an increase in its Arizona HMO 2025 star rating from 3.5 to 4 stars, implying that all of Alignment's Medicate Advantage members are in plans rated four stars or above, according to the insurer. The company serves nearly 217,500 Medicare beneficiaries across Arizona, California, Nevada, North Carolina, and Texas.

'This decision affirms the quality of care we deliver and recognises the importance of accuracy and fairness in the Medicare Advantage Star Ratings program,' said John Kao, CEO of Alignment Healthcare. 'Our Arizona members can now have even greater confidence that they are enrolled in one of the highest-quality plans available in the state.'

Note that the US court did not concur with several of Alignment's arguments that other CMS actions, like using a new methodology for scoring, were illegal, or that the ratings system disadvantages smaller insurers.

The Alignment Healthcare stock closed at £9.89 ($13.38) on Thursday, and prices are up 18.93% year-to-date. Several brokerages like Bank of America, Piper Sandler, TD Cowen, Raymond James, and William Blair have maintained a 'Buy' rating on Alignment Healthcare. Analysts polled by TipRanks have an average 12-month stock price target of £12.83 ($17.36), with the highest forecast of £16.26 ($22) per share.

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