5. Altria Group, Inc. (NYSE:MO)
Number of Hedge Fund Holders: 32
Altria Group, Inc. (NYSE:MO) is an American tobacco company that manufactures a wide range of related products including cigarettes and other nicotine products. Though not directly involved in brewing itself, the company owns a significant stake in Anheuser-Busch, the largest beer company in the world.
Billy Gifford, CEO of Altria Group, Inc. (NYSE:MO), recently stated:
“Over the decades of our ownership, the beer investment has provided significant income and cash returns and supported our strong balance sheet. Our continued investment reflects ongoing confidence in ABI’s long-term strategies, premium global brands and experienced management team.”
However, Altria Group, Inc. (NYSE:MO)’s primary focus remains the tobacco industry, or rather on selling traditional cigarettes within the US market. It operates exclusively in North America and holds control over Marlboro, the most popular cigarette brand in the region. The company also boasts a robust smoke-free product portfolio, particularly oral nicotine pouches, and heated tobacco products.
Altria Group, Inc. (NYSE:MO) announced the acquisition of e-cigarette maker NJOY last year and it seems the investment is going well. The company has been able to grow that business very quickly as it pushed the new product through its strong distribution network. In Q3 of 2024, NJOY consumables shipment volume grew more than 15% YoY to 10.4 million units, while NJOY device shipment volume for the quarter nearly tripled versus the prior year to 1.1 million units and was 3.9 million units for the first nine months. However, Altria’s cigarette volumes have been declining consistently over the last few years and the NJOY business is nowhere near large enough to offset the troubling downturns in its core business. The company has been able to balance volume declines with price increases, but the decreasing market share of its Marlboro brand means that consumers are likely shifting to cheaper ways to consume nicotine.
Altria Group, Inc. (NYSE:MO) remains committed to its shareholders and paid $1.7 billion to shareholders through dividends in Q3. In fact, the company has raised its payouts 59 times in the last 55 years and is included in our list of the Top 15 Dividend Kings. Altria also repurchased 13.5 million shares for $680 million in Q3.
Altria Group, Inc. (NYSE:MO) stock has emerged as an impressive winner this year and has gained almost 26% this year, primarily due to a better-than-anticipated quarterly performance driven by growth in its oral tobacco products.
Ashva Capital stated the following regarding Altria Group, Inc. (NYSE:MO) in its Q3 2024 investor letter:
“At Ashva Capital, our focus on intrinsic value–rather than market sentiment or temporary price metrics– sets our portfolio apart from peers. For example, we hold Altria Group, Inc. (NYSE:MO), which has demonstrated resilience and strong performance within our portfolio, particularly following a robust Q3 earnings report. Altria’s results highlighted increased demand for smokeless products, underscoring both the adaptability of its business model and its long-term growth potential—a key factor in our investment decision.
This approach to intrinsic value echoes insights from renowned value investor Bill Miller, whose strategy emphasized fundamental value over market-driven factors. Key principles from Miller’s approach that inform our strategy include:..” (Click here to read the full text)
