6. Philip Morris International Inc. (NYSE:PM)
Number of Hedge Fund Holders: 70
Philip Morris International Inc. (NYSE:PM) is a prominent tobacco company that ranks sixth on our list of the best defensive stocks according to Reddit. The company behind Marlboro sells its products in more than 180 countries from across the globe. Its product portfolio contains cigarettes, cigarillos, cigars, electronic cigarettes, heated tobacco products, and nicotine pouches.
Philip Morris International Inc. (NYSE:PM) logged $9.5 billion in sales during the second quarter, up by 9.6%. As for its smoke-free product lines, revenue climbed by 18% and gross profits surged by 22%. Almost 40% of the company’s income comes from its nicotine pouches and heat-not-burn devices. Philip Morris International (NYSE:PM) plans to invest over $232 million to expand its manufacturing plant in Owensboro, Kentucky. The expansion will be completed by the second quarter of 2025 and will help the company meet the growing demand for nicotine pouches in the area.
The company aims to build a smoke-free future by introducing such products. So far, the company has invested over $12.6 billion in developing smoke-free products and has given up on cigarettes completely. By 2030, Philip Morris International (NYSE:PM) intends to become a smoke-free company by a two-thirds majority. While smoke-free alternatives are not entirely risk-free, the company’s products may deliver a reduction in smoking-related deaths by more than 10 times. Marlboro, the company’s most prominent brand is set to be dethroned by PMI’s heated tobacco product, IQOS.
By the end of the second quarter, 70 hedge funds held shares in Philip Morris International Inc. (NYSE:PM) with total stakes amounting to $9.54 billion. The largest shareholder was GQG Partners, managed by Rajiv Jain, with a position worth $3.67 billion, as of June 30.
Andvari Associates stated the following regarding Philip Morris International Inc. (NYSE:PM) in its Q2 2024 investor letter:
“Andvari invested in Philip Morris International Inc. (NYSE:PM) a few months after initiating a position in fellow tobacco company Altria. The tobacco industry is one that has consolidated to only a handful of players. For decades, the industry has more than offset the continual decline in cigarette volumes with price increases. More recently, both Altria and Philip Morris have introduced several new product categories that deliver nicotine in much safer ways: vaping, nicotine pouches, and heat-not-burn products. Nicotine pouches in particular continue to have an extraordinary growth trajectory. In the most recent quarter, the volumes of Altria’s On! pouches and Philip Morris’ Zyn pouches continued their torrid growth rates at 30%+ and 70%+ year over year, respectively.
For Philip Morris and Altria, their margins are high, returns on equity and capital are high, and both trade at what Andvari views as cheap or very cheap multiples. Given the non-zero chance of a “nicotine renaissance” aided by less harmful products, we do not think the future for these companies is as dim as the market seems to think.”
