Is Philip Morris International Inc. (PM) A Good Stock To Buy?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Philip Morris International Inc. (NYSE:PM).

Is PM a good stock to buy now? Philip Morris International Inc. (NYSE:PM) has seen an increase in activity from the world’s largest hedge funds lately. Philip Morris International Inc. (NYSE:PM) was in 48 hedge funds’ portfolios at the end of September. The all time high for this statistic is 60. Our calculations also showed that PM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s check out the latest hedge fund action regarding Philip Morris International Inc. (NYSE:PM).

Ray Dalio of Bridgewater Associates

Do Hedge Funds Think PM Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PM over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Fundsmith LLP, managed by Terry Smith, holds the biggest position in Philip Morris International Inc. (NYSE:PM). Fundsmith LLP has a $1.8345 billion position in the stock, comprising 5.1% of its 13F portfolio. On Fundsmith LLP’s heels is Rajiv Jain of GQG Partners, with a $1.3494 billion position; the fund has 3.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Andy Brown’s Cedar Rock Capital, Tom Russo’s Gardner Russo & Gardner and John W. Rogers’s Ariel Investments. In terms of the portfolio weights assigned to each position Cedar Rock Capital allocated the biggest weight to Philip Morris International Inc. (NYSE:PM), around 18.47% of its 13F portfolio. Stamina Capital Management is also relatively very bullish on the stock, dishing out 10.58 percent of its 13F equity portfolio to PM.

Consequently, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable call position in Philip Morris International Inc. (NYSE:PM). Balyasny Asset Management had $56.9 million invested in the company at the end of the quarter. Christopher Weldon’s Stamina Capital Management also initiated a $42.3 million position during the quarter. The other funds with brand new PM positions are John Hempton’s Bronte Capital, Ray Dalio’s Bridgewater Associates, and Michael Gelband’s ExodusPoint Capital.

Let’s check out hedge fund activity in other stocks similar to Philip Morris International Inc. (NYSE:PM). We will take a look at Intuit Inc. (NASDAQ:INTU), Honeywell International Inc. (NASDAQ:HON), QUALCOMM, Incorporated (NASDAQ:QCOM), Citigroup Inc. (NYSE:C), Royal Bank of Canada (NYSE:RY), Lowe’s Companies, Inc. (NYSE:LOW), and Unilever PLC (NYSE:UL). All of these stocks’ market caps are closest to PM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 50.1 hedge funds with bullish positions and the average amount invested in these stocks was $3321 million. That figure was $5925 million in PM’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 bullish hedge fund positions. Philip Morris International Inc. (NYSE:PM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PM is 56.4. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately PM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PM investors were disappointed as the stock returned -9.3% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.