Is Philip Morris (PM) Stock A Buy or Sell?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Philip Morris International Inc. (NYSE:PM).

Is PM stock a buy or sell? Philip Morris International Inc. (NYSE:PM) was in 52 hedge funds’ portfolios at the end of December. The all time high for this statistic is 60. PM investors should be aware of an increase in enthusiasm from smart money in recent months. There were 50 hedge funds in our database with PM positions at the end of the third quarter. Our calculations also showed that PM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Today there are numerous indicators shareholders employ to appraise publicly traded companies. A pair of the most underrated indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can trounce the S&P 500 by a superb margin (see the details here).

Bruce Berkowitz of Fairholme (FAIRX)

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage (or at the end of this article). Keeping this in mind we’re going to review the fresh hedge fund action encompassing Philip Morris International Inc. (NYSE:PM).

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

At fourth quarter’s end, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the third quarter of 2020. On the other hand, there were a total of 57 hedge funds with a bullish position in PM a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Terry Smith’s Fundsmith LLP has the most valuable position in Philip Morris International Inc. (NYSE:PM), worth close to $1.6118 billion, corresponding to 5.3% of its total 13F portfolio. The second most bullish fund manager is Cedar Rock Capital, led by Andy Brown, holding a $771 million position; 16.7% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism contain Tom Russo’s Gardner Russo & Gardner, John W. Rogers’s Ariel Investments and Ken Griffin’s Citadel Investment Group. 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 16.67% of its 13F portfolio. Gardner Russo & Gardner is also relatively very bullish on the stock, dishing out 6.31 percent of its 13F equity portfolio to PM.

As industrywide interest jumped, some big names have been driving this bullishness. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, created the biggest position in Philip Morris International Inc. (NYSE:PM). LMR Partners had $16.4 million invested in the company at the end of the quarter. Brian Scudieri’s Kehrs Ridge Capital also initiated a $15.3 million position during the quarter. The following funds were also among the new PM investors: Paul Tudor Jones’s Tudor Investment Corp, Bruce Berkowitz’s Fairholme (FAIRX), and Peter Algert’s Algert Global.

Let’s also examine hedge fund activity in other stocks similar to Philip Morris International Inc. (NYSE:PM). These stocks are Citigroup Inc. (NYSE:C), Starbucks Corporation (NASDAQ:SBUX), Sony Corporation (NYSE:SNE), Wells Fargo & Company (NYSE:WFC), Morgan Stanley (NYSE:MS), Sanofi (NASDAQ:SNY), and The Boeing Company (NYSE:BA). This group of 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 60.7 hedge funds with bullish positions and the average amount invested in these stocks was $4189 million. That figure was $4427 million in PM’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Sanofi (NASDAQ:SNY) is the least popular one with only 15 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 55. 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 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. A small number of hedge funds were also right about betting on PM as the stock returned 9.3% since the end of the fourth quarter (through 3/19) and outperformed the market by an even larger margin.

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