4. Philip Morris International Inc. (NYSE:PM)
Bridgewater Associates’ Stake Value: $6,838,000
Percent of Bridgewater Associates’ 13F Portfolio: 0.03%
Number of Hedge Fund Holders: 46
Philip Morris International Inc. (NYSE:PM), a multinational cigarette and tobacco manufacturing company, has a track record of 13 years of consistent dividend growth. The company currently pays an annual dividend of $5.00 per share, with a dividend yield of 5.34%.
In Q3, Bridgewater Associates started building its position in Philip Morris International Inc. (NYSE:PM), with shares worth roughly $7 million. The company represents 0.03% of Ray Dalio’s portfolio. In its Q3 results, Philip Morris International Inc. (NYSE:PM) reported a 9% growth in its revenue at $8.12 billion. The revenue also beat the analysts’ estimates by $190 million. Recently, Deutsche Bank lifted its price target on Philip Morris International Inc. (NYSE:PM) to $120, while keeping a Buy rating on the shares.
Of the 873 hedge funds tracked by Insider Monkey, 46 hedge funds held stakes in Philip Morris International Inc. (NYSE:PM) in Q2, down from 48 in the previous quarter. The total value of these stakes is roughly $6 billion.
In its Q2 2021 investor letter, Broyhill Asset Management mentioned Philip Morris International Inc. (NYSE: PM) and discussed its stance on the firm. Here is what the fund said:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
