Hedge Funds’ #1 Stock Picks in Real Estate, Airlines, Beer & More

Hedge Funds’ #1 Beer Stock Pick: Constellation Brands, Inc. (NYSE:STZ)

Number of Hedge Fund Shareholders of STZ (as of June 30): 62

Value of Hedge Funds’ Holdings in STZ (as of June 30): $6.02 billion

Constellation Brands, Inc. (NYSE:STZ) easily tops major North American beer makers Molson Coors Brewing Co (NYSE:TAP) and Anheuser Busch Inbev NV (NYSE:BUD) for top spot among beer stocks. A total of 62 hedge funds were long Constellation Brands on June 30, compared to meager tallies of 19 for Molson Coors and 21 for Anheuser Busch, both of which also lost hedge fund support in Q2 as beer sales contract slightly in North America and margins stagnate. Michael Lowenstein‘s Kensico Capital owned the largest Constellation Brands, Inc. (NYSE:STZ) position among the funds in our system on June 30, amounting to 4.28 million shares.

Constellation Brands, Inc. (NYSE:STZ) shares have climbed back into positive territory for the year after sliding to 52-week lows in mid-August. One of the biggest catalysts pushing shares higher over the past two months has been Constellation Brands’ $4 billion investment in Canadian cannabis company Canopy Growth. The deal allows Constellation to test cannabis-infused non-alcoholic beverages in Canada, which has the potential to be a huge growth market, while also giving the company the option to take a controlling stake in Canopy Growth at a future date.

Hedge Funds’ #1 Real Estate Stock Pick: Lennar Corporation (NYSE:LEN)

Number of Hedge Fund Shareholders of LEN (as of June 30): 63

Value of Hedge Funds’ Holdings in LEN (as of June 30): $3.76 billion

Lennar Corporation (NYSE:LEN) is hedge funds’ favorite real estate stock, being owned by 63 of the investment firms tracked in our database as of June 30. That easily toppled the closest rival D.R Horton (DHI), which was owned by 36 hedge funds on the same date. Matthew Knauer and Mina Faltas’ Nokota Management opened a new position in Lennar during the second quarter, which contained 272,475 shares at the end of the quarter.

Shares of homebuilders have slumped in 2018 and Lennar Corporation (NYSE:LEN)’s shares have been no exception, falling by over 33% this year. Despite a hot economy, the housing market has cooled off considerably of late, with monthly sales falling on a year-over-year basis in each of the past six months as rising mortgage rates and homebuilding costs have tempered consumer enthusiasm for home ownership. Lennar Corporation (NYSE:LEN) is discussing the sale of its real estate lending unit Rialto Capital with private equity firm Stone Point Capital, in an effort to bolster its core business.

Hedge Funds’ #1 Retail Stock Pick: Lowe’s Companies, Inc. (NYSE:LOW)

Number of Hedge Fund Shareholders of LOW (as of June 30): 56

Value of Hedge Funds’ Holdings in LOW (as of June 30): $3.72 billion

Lowe’s Companies, Inc. (NYSE:LOW) upsets mega retailer Walmart Inc (NYSE:WMT) to hold down the top spot among retail stocks. 56 hedge funds were long Lowe’s on June 30, down from 72 at the end of March. Despite the large decline in hedge fund ownership during Q2, Lowe’s remained just ahead of Walmart, which was owned by 52 hedge funds on June 30, and home improvement rival Home Depot Inc (NYSE:HD), which was also owned by 52 funds.

Bill Ackman‘s Pershing Square opened a 7.72 million-share position in Lowe’s Companies, Inc. (NYSE:LOW) during Q2 and has been amply rewarded for the move thus far, with shares having jumped by nearly 25% since he revealed his $1 billion position in the company. Ackman has said that Lowe’s has similar upside potential under new CEO Marvin Ellison as one of his most successful past investments, Canadian Pacific Railway, did under its Ackman-appointed CEO. Ellison, who previously served in upper management positions at Home Depot, has been busy reworking Lowe’s Companies, Inc. (NYSE:LOW) executive structure to increase management’s efficiency.

Disclosure: None