Broyhill Asset Management, a boutique investment firm based in North Carolina, released its Q1 2020 Investor letter – a copy of which can be downloaded here. Established as a family office, the company invests with a long-term, objective, and rational perspective. You should check out Broyhill Asset Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.
In the said letter, Broyhill Asset Management spoke about Ambev S.A. (NYSE:ABEV) and Anheuser Busch Inbev SA NV (NYSE:BUD) stocks. Ambev and Anheuser Busch Inbev are alcohol and tobacco companies. Year-to-date, Ambev S.A. (NYSE:ABEV) stock lost 44.6% and on June 12th it had a closing price of $2.71. Year-to-date, Anheuser Busch Inbev SA NV (NYSE:BUD) stock lost 39.1% and on June 12th it had a closing price of $51.48. Here is what Broyhill Asset Management said:
“We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.
Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”
In Q4 2019, the number of bullish hedge fund positions on Ambev S.A. (NYSE:ABEV) stock decreased by about 26% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with ABEV’s growth potential.
In Q4 2019, the number of bullish hedge fund positions on Anheuser Busch Inbev SA NV (NYSE:BUD) stock increased by about 10% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with BUD’s growth potential.
Our calculations showed that Ambev S.A. (NYSE:ABEV) and Anheuser Busch Inbev SA NV (NYSE:BUD) aren’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
