We recently published a list of Billionaire Daniel Sundheim’s Top 15 Stock Picks Heading Into 2025. In this article, we are going to take a look at where Philip Morris International Inc. (NYSE:PM) stands against other Billionaire Daniel Sundheim’s stock picks heading into 2025.
D1 Capital Partners might be one of the youngest hedge funds but it is one with a solid track record in a highly competitive landscape. Founded in 2018, the hedge fund successfully navigated the downturn triggered by the COVID-19 pandemic thanks to an aggressive investment strategy that revolves around fundamental research.
Daniel Sundheim is the brainchild, having started the hedge fund with $5 billion seed capital. As the founder and chief investment officer, he propelled the hedge fund to prominence in 2020 with a 54% gain in one of the most unpredictable years in the investment world. The stellar performance that continued into 2021 came as the value hedge fund focused on private equity and emerging startups that accounted for 50% of the portfolio.
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Nevertheless, Sundheim had one of the worst years of his career in 2022 as the overall equity markets came under pressure amid heightened inflation. As the S&P 500 fell 19.4%, D1 Capital ended up underperforming, going down by 30.5%. However, the hedge fund bounced back to winning ways in 2023, gaining more than 19% as it marked down some of its private investments.
Sundheim’s knack for investing started while he was an undergraduate at the Wharton School University of Pennsylvania. While in college, he invested and traded tech stocks. He went on to gain valuable investing experience while working as an analyst at Bear Stearns.
“Certain people are born to do certain things, and Dan was born to deploy capital,” said Dris Upitis, a former portfolio manager at Viking with Sundheim.
D1 Capital Partners’ edge stems from an investment strategy that revolves around fundamental research to uncover undervalued investment opportunities. Additionally, the hedge fund engages in diversification as one of the ways of spreading the risk and shrugging the pitfalls of volatility in specific sectors.
While controlling about $5.2 billion in portfolio value, Sundheim invests close to a third of its capital in private market bets. Industrial services and consumer stocks also account for the most significant share of the hedge fund’s portfolio. It also has substantial exposure to tech stocks from which it is benefiting from the artificial intelligence frenzy.
According to Sundheim, public companies are the best way to tap into the AI frenzy. Likewise, the investment officer expects artificial intelligence, unlike other technological advances, to be felt across all sectors. Companies investing billions of dollars into talent and AI projects are doing so without expecting short-term returns and are focused on long-term returns.
As the chief investment officer, Sundheim leverages long/short equity strategies using equity derivatives, convertibles, and fixed-income instruments to generate value in the markets. D1 Capital Partners is already up by more than 30% for the year, affirming the effectiveness of Sundheim’s investment strategy. The stellar performance has primarily been driven by gains in the industrial and consumer stocks which are benefiting from a resilient US economy.
Billionaire Daniel Sundheim’s top 15 stock picks heading into 2025 consist of stocks poised to benefit from a resilient US economy as interest rates come down.
Our Methodology
To compile the list of billionaire Daniel Sundheim’s Top 15 Stock Picks for 2025, we reviewed D1 Capital Partners’ investment portfolio. We identified the hedge fund’s fifteen largest holdings and analyzed their potential for long-term investment. Finally, we ranked these stocks in ascending order based on D1 Capital Partners’ stakes in each one.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A man exhaling smoke from a cigarette indicating the use of tobacco products.
Philip Morris International Inc. (NYSE:PM)
D1 Capital Partners’ Equity Stake: $399.03 Million
Number of Hedge Fund Holders as of Q3 2024: 75
Philip Morris International Inc. (NYSE:PM) is a tobacco company that delivers a smoke-free future through products outside the tobacco and nicotine sector. Its product portfolio consists of cigarettes and smoke-free products, including heat-not-burn, vapour, and oral nicotine products. Its stock has climbed to an all-time high, affirming why it is one of billionaire Daniel Sundheim’s top 15 stock picks heading into 2025.
The 32% year-to-date gain comes from Philip Morris International Inc. (NYSE:PM) delivering better-than-expected results and raising its full-year outlook amid strong demand for non-cigarette products. The maker of Marlboro cigarettes and Zyn nicotine pouches reported third-quarter adjusted earnings per share (EPS) of $1.91 on October 22, 2024. Revenues grew 6.7% from a year ago to $2.96 billion. Philip Morris expects its full-year adjusted diluted EPS of $6.45 to $6.51, up from its previous outlook of $6.33 to $6.45.
Philip Morris International Inc.’s (NYSE:PM) oral product shipments increased by almost 40% in the first nine months of 2024 compared to the same period the previous year. The increase was due to strong Zyn demand in the United States. Reducing the product’s supply constraints has contributed to some of that growth.
Zyn has emerged as a symbol of the transition towards alternatives away from traditional cigarettes. Consequently, it is expected to generate significant long-term value. Philip Morris International Inc. (NYSE:PM) announced earlier this year that it would invest $600 million to build a new production facility for Zyn in Colorado to take advantage of the soaring demand.
Overall, PM ranks 3rd on our list of Billionaire Daniel Sundheim’s stock picks heading into 2025. While we acknowledge the potential of PM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
