Here is What Hedge Funds and Insiders Think About British American Tobacco PLC (ADR) (BTI)

Is British American Tobacco PLC (ADR) (NYSEAMEX:BTI) a good investment?

In the eyes of many market players, hedge funds are viewed as delayed, outdated investment tools of an era lost to time. Although there are over 8,000 hedge funds in operation today, Insider Monkey focuses on the elite of this club, close to 525 funds. It is assumed that this group controls the majority of the hedge fund industry’s total assets, and by tracking their highest performing picks, we’ve brought to light a few investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as necessary, optimistic insider trading sentiment is a second way to analyze the financial markets. Obviously, there are plenty of stimuli for an insider to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this strategy if piggybackers understand where to look (learn more here).

Furthermore, we’re going to discuss the latest info surrounding British American Tobacco PLC (ADR) (NYSEAMEX:BTI).

How have hedgies been trading British American Tobacco PLC (ADR) (NYSEAMEX:BTI)?

At Q2’s end, a total of 10 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially.

According to our 13F database, Ken Fisher’s Fisher Asset Management had the largest position in British American Tobacco PLC (ADR) (NYSEAMEX:BTI), worth close to $352.6 million, comprising 0.9% of its total 13F portfolio. The second largest stake is held by Tom Russo of Gardner Russo & Gardner, with a $241.2 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Some other peers that are bullish include Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital, Malcolm Fairbairn’s Ascend Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Due to the fact British American Tobacco PLC (ADR) (NYSEAMEX:BTI) has witnessed declining interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies that decided to sell off their positions entirely last quarter. Intriguingly, Jim Simons’s Renaissance Technologies sold off the biggest investment of the “upper crust” of funds we track, worth close to $2.2 million in stock. Steven Cohen’s fund, SAC Capital Advisors, also dropped its stock, about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in British American Tobacco PLC (ADR) (NYSEAMEX:BTI)

Bullish insider trading is at its handiest when the company in focus has seen transactions within the past six months. Over the latest half-year time period, British American Tobacco PLC (ADR) (NYSEAMEX:BTI) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to British American Tobacco PLC (ADR) (NYSEAMEX:BTI). These stocks are Vector Group Ltd (NYSE:VGR), Lorillard Inc. (NYSE:LO), Reynolds American, Inc. (NYSE:RAI), Altria Group Inc (NYSE:MO), and Philip Morris International Inc. (NYSE:PM). This group of stocks are the members of the cigarettes industry and their market caps are closest to BTI’s market cap.