Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Altria Group Inc (NYSE:MO).
Is MO stock a buy? Money managers were selling. The number of bullish hedge fund bets were trimmed by 10 recently. Altria Group Inc (NYSE:MO) was in 37 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 54. Our calculations also showed that MO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 47 hedge funds in our database with MO positions at the end of the third quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a look at the new hedge fund action regarding Altria Group Inc (NYSE:MO).
Do Hedge Funds Think MO Is A Good Stock To Buy Now?
At the end of December, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MO over the last 22 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Altria Group Inc (NYSE:MO), with a stake worth $377.8 million reported as of the end of December. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $181 million. D E Shaw, Adage Capital Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Callodine Capital Management allocated the biggest weight to Altria Group Inc (NYSE:MO), around 5.95% of its 13F portfolio. Hengistbury Investment Partners is also relatively very bullish on the stock, dishing out 5.29 percent of its 13F equity portfolio to MO.
Due to the fact that Altria Group Inc (NYSE:MO) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their entire stakes by the end of the fourth quarter. Intriguingly, John Overdeck and David Siegel’s Two Sigma Advisors cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $140.2 million in stock. David Tepper’s fund, Appaloosa Management LP, also cut its stock, about $35.7 million worth. These transactions are interesting, as total hedge fund interest dropped by 10 funds by the end of the fourth quarter.
Let’s now review hedge fund activity in other stocks similar to Altria Group Inc (NYSE:MO). These stocks are Fiserv, Inc. (NASDAQ:FISV), NIO Inc. (NYSE:NIO), Automatic Data Processing (NASDAQ:ADP), Cigna Corporation (NYSE:CI), Snap Inc. (NYSE:SNAP), Baidu, Inc. (NASDAQ:BIDU), and Prologis Inc (NYSE:PLD). 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 |
|---|---|---|---|
| FISV | 94 | 5178126 | 4 |
| NIO | 34 | 2634013 | -1 |
| ADP | 48 | 3064769 | 6 |
| CI | 57 | 2578300 | -5 |
| SNAP | 63 | 4610841 | 12 |
| BIDU | 51 | 4634061 | 8 |
| PLD | 36 | 655443 | 3 |
| Average | 54.7 | 3336508 | 3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.7 hedge funds with bullish positions and the average amount invested in these stocks was $3337 million. That figure was $1083 million in MO’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 34 bullish hedge fund positions. Altria Group Inc (NYSE:MO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MO is 18.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. A small number of hedge funds were also right about betting on MO as the stock returned 26.5% since the end of the fourth quarter (through 4/1) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
