In this article, we take a look at the top 5 stock picks of Ryan Caldwell’s Chiron Investment. If you want to see our detailed analysis of these stocks and read about the performance of Chiron Investment Management over the years, you can go directly to the Top 10 Stock Picks of Ryan Caldwell’s Chiron Investment.
5. Philip Morris International Inc. (NYSE:PM)
Stake Value of Chiron Investment Management: $30,378,000
Percentage of Chiron Investment Management’s 13F Portfolio: 4.8%
Number of Hedge Fund Holders: 48
Philip Morris International Inc. (NYSE:PM) manufactures and sells cigarettes, various nicotine-containing products, smoke-free products, and related electronic devices and accessories. This October, it was reported by Philip Morris International Inc. (NYSE:PM) that despite the semi-conductor shortage that has resulted in low growth rates for IQOS device users throughout the third quarter of 2021, and is expected to persist during the first half of 2022, the company is still optimistic about achieving its 2021-2023 growth targets.
By the end of the third quarter of 2021, Insider Monkey was able to identify 48 hedge funds that held a stake in Philip Morris International Inc. (NYSE:PM). The total value of these stakes was $5.92 billion.
For the third quarter of 2021, Philip Morris International Inc. (NYSE:PM) generated revenues of up to $8.12 billion, up 9.08% year over year, beating estimates by $175.15 million. The company’s earnings per share for the quarter were reported at $1.58, beating EPS estimates by $0.02.
Broyhill Asset Management, an investment management firm, published its second-quarter 2021 investor letter in which they gave their take on whether or not to invest in Philip Morris International Inc. (NYSE:PM). Here’s what they said:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
