Hugh Hendry’s Eclectica Asset Management has filed its Form 13F with the U.S. Securities and Exchange Commission for the reporting period of March 31. Hendry founded London-based Eclectica Asset Management in 2005 and the fund made a name for itself in 2008 when it managed to return 31.2% during a year in which many hedge funds had negative returns. Despite losing more than 4% through the first eight months of 2014, the fund returned more than 12% in the following three months to lift it to returns of 7.8% for the year through November 2014. Eclectica’s latest 13F revealed an equity portfolio valued at $38.3 million, with the portfolio containing a total of 30 long positions, mostly in consumer staples and materials sector companies. The investor’s largest stakes reside within a very narrow niche of the consumer staples sector: tobacco. We’ll take a look at those top stocks, Reynolds American Inc. (NYSE:RAI), Altria Group Inc (NYSE:MO), and Philip Morris International Inc. (NYSE:PM) in this article.
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First we will discuss Reynolds American Inc. (NYSE:RAI), the top holding of Hendry’s fund, which reported owning 56,000 shares of the company valued at $3.88 million. The stake remained unchanged over the quarter. North Carolina-based tobacco company Reynolds American Inc. (NYSE:RAI) has a market cap of $40.5 billion. The company’s stock currently trades at $75.70, moving up by over 16% during the last five months. Reynolds American Inc. (NYSE:RAI) reported better than expected financial results for the first quarter of 2015, posting revenues of $2.1 billion, beating analysts’ estimates of about $2.0 billion. The company’s adjusted net income for the quarter was $457 million, representing a significant increase from the $386 million it earned in the same quarter of 2014. Other large shareholders of Reynolds American Inc. (NYSE:RAI) include David Winters’ Wintergreen Advisers and Ken Griffin’s Citadel Investment Group, who both reported holding big positions in the company at the end of 2014.
The second largest holding of Hendry is represented by Altria Group Inc (NYSE:MO), a $100.9-billion market cap company engaged in the manufacturing of cigarettes, cigars, wine, and smokeless products. Hendry held 75,200 shares worth $3.78 million of Altria Group Inc (NYSE:MO) at the end of the first quarter. The number of shares also remained unchanged from the previous quarter. Altria Group Inc (NYSE:MO), which is one of the largest tobacco companies in the world, reported first quarter adjusted diluted EPS of $0.63, up 10.5% from $0.57 in the previous year. In addition, the company reaffirmed its full-year 2015 guidance for adjusted diluted EPS at a range of between $2.75 and $2.80. The company’s stock soared by nearly 26% during the last calendar year. Another investor, Matthew Tewksbury‘s Stevens Capital Management, in its latest 13F, reported ownership of 830,051 shares of Altria Group Inc (NYSE:MO) valued at $41.52 million. Tom Russo’s Gardner Russo & Gardner held an even larger position, of about 6.94 million shares of Altria Group Inc (NYSE:MO) as of the end of 2014.
Philip Morris International Inc. (NYSE:PM) remains the third largest holding of Hendry, who holds 38,800 shares of the company valued at $2.94 million. The $131.4-billion market cap company was able to beat revenue and earnings estimates for the first quarter of 2015, reporting diluted earnings per share of $1.16 and revenues of $6.6 billion for the quarter. Moreover, Philip Morris International Inc. (NYSE:PM) increased its 2015 full-year diluted EPS forecast to $4.32 to $4.42, though that would still fall below the $4.76 per share the company earned in 2014. Argentiere Capital, led by Deepak Gulati, disclosed owning 70,500 shares of Philip Morris International Inc. (NYSE:PM) valued at $5.31 million as of the end of the first quarter.
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