Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Altria Group Inc (NYSE:MO) and compare its performance to hedge funds’ consensus picks in 2019.
Altria Group Inc (NYSE:MO) investors should be aware of an increase in hedge fund interest lately. Our calculations also showed that MO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
If you’d ask most investors, hedge funds are seen as unimportant, old investment tools of yesteryear. While there are over 8000 funds trading at the moment, Our experts choose to focus on the crème de la crème of this club, approximately 750 funds. These hedge fund managers direct most of the hedge fund industry’s total asset base, and by following their best stock picks, Insider Monkey has identified many investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to go over the latest hedge fund action regarding Altria Group Inc (NYSE:MO).
What does smart money think about Altria Group Inc (NYSE:MO)?
At the end of the third quarter, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the previous quarter. On the other hand, there were a total of 41 hedge funds with a bullish position in MO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Altria Group Inc (NYSE:MO) was held by Renaissance Technologies, which reported holding $256.8 million worth of stock at the end of September. It was followed by AQR Capital Management with a $207.1 million position. Other investors bullish on the company included Two Sigma Advisors, Gardner Russo & Gardner, and Millennium Management. In terms of the portfolio weights assigned to each position Knoll Capital Management allocated the biggest weight to Altria Group Inc (NYSE:MO), around 3.37% of its 13F portfolio. Twin Capital Management is also relatively very bullish on the stock, earmarking 2.58 percent of its 13F equity portfolio to MO.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Altria Group Inc (NYSE:MO) headfirst. ExodusPoint Capital, managed by Michael Gelband, established the biggest call position in Altria Group Inc (NYSE:MO). ExodusPoint Capital had $14.3 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $11.3 million investment in the stock during the quarter. The other funds with brand new MO positions are Donald Sussman’s Paloma Partners, Paul Marshall and Ian Wace’s Marshall Wace, and Michael Price’s MFP Investors.
Let’s now review hedge fund activity in other stocks similar to Altria Group Inc (NYSE:MO). We will take a look at CME Group Inc (NASDAQ:CME), Goldman Sachs Group, Inc. (NYSE:GS), Chubb Limited (NYSE:CB), and Sony Corporation (NYSE:SNE). All of these stocks’ market caps match MO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CME | 46 | 2245287 | 7 |
| GS | 72 | 8237468 | 11 |
| CB | 26 | 612921 | 1 |
| SNE | 26 | 783005 | -9 |
| Average | 42.5 | 2969670 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.5 hedge funds with bullish positions and the average amount invested in these stocks was $2970 million. That figure was $1365 million in MO’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand Chubb Limited (NYSE:CB) is the least popular one with only 26 bullish hedge fund positions. Altria Group Inc (NYSE:MO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately MO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MO were disappointed as the stock returned 9.6% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
