Oakmark Funds, an investment management firm, published its “Oakmark Fund” first quarter 2021 investor letter – a copy of which can be seen here. A return of 15.5% was reported by the fund in the Q1 of 2021, outperforming its S&P 500 benchmark that delivered a 6.2% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Oakmark Funds, in their Q1 2021 investor letter, mentioned Altria Group, Inc. (NYSE: MO) and shared their insights on the company. Altria Group, Inc. is a Richmond, Virginia-based tobacco company that currently has a $95.8 billion market capitalization. Since the beginning of the year, MO delivered a 26.22% return, extending its 12-month gains to 27.97%. As of April 12, 2021, the stock closed at $51.75 per share.
Here is what Oakmark Funds has to say about Altria Group, Inc. in their Q1 2021 investor letter:
“We initiated a new position in Altria, which commands roughly 50% of the cigarette and smokeless tobacco market in the U.S. Both of these markets are duopolies that we believe have exhibited strong pricing power over time. While the shares trade at a low multiple of reported earnings, Altria also owns valuable stakes in other non-core businesses, including ~10% of AB InBev, 35% of Juul and 45% of Cronos. Excluding the values of these stakes and their respective earnings contribution, we were able to purchase shares of Altria for less than seven times our estimate of next year’s earnings. This compares to other consumer brands with less favorable earnings growth profiles that trade for three times Altria’s multiple. The company also has several promising reduced-risk products that may appeal to tobacco users, including On! and iQOS. We believe these products position the company well to help consumers slowly transition to a tobacco-free future. We expect management to return the vast majority of future earnings to shareholders given the company’s strong balance sheet, high free cash flow conversion and limited capital requirements.”
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Our calculations show that Altria Group, Inc. (NYSE: MO) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Altria Group, Inc. was in 37 hedge fund portfolios, down from 47 funds in the third quarter. MO delivered a 25.15% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
