Moon Capital Management, LLC, an investment management company, released its first quarter 2024 investor letter. A copy of the letter can be downloaded here. The strategy’s portfolio surged ~13% in the first quarter along with the stock market, which rose 5-to-10% during the quarter. Kindly check the top 5 stocks of the strategy to know its best picks in 2024.
Moon Capital Management highlighted stocks like British American Tobacco p.l.c. (NYSE:BTI), in the first quarter 2024 investor letter. British American Tobacco p.l.c. (NYSE:BTI) engages in the manufacture and distribution of tobacco and nicotine products. The one-month return of British American Tobacco p.l.c. (NYSE:BTI) was -2.30% and its shares lost 6.67% of their value over the last 52 weeks. On June 14, 2024, British American Tobacco p.l.c. (NYSE:BTI) stock closed at $30.63 per share with a market capitalization of $67.627 billion.
Moon Capital Management stated the following regarding British American Tobacco p.l.c. (NYSE:BTI) in its first quarter 2024 investor letter:
“We recently acquired shares in British American Tobacco p.l.c. (NYSE:BTI). It’s certainly no secret that the tobacco industry faces significant regulatory challenges, particularly in the U.S. combustibles sector. (Combustibles are traditional cigarette products that, when lit, the combination of the tobacco (fuel) and oxygen in the air produces a self-sustaining combustion process that consumes the tobacco. This contrasts with various heat-not-burn products, including e-cigarettes.) Despite these headwinds, however, BTI has organically grown its revenue by more than 4% annually over the last five years. The company’s operating profit has also risen more than 5% per year, even as the company has distributed massive dividends. (The company currently pays a dividend yield of 10%.)
BTI’s current free cash flow yield exceeds 16% – a figure that climbs even higher when adjusted for the company’s non-operating strategic investments. The largest of these is a 29% stake in Indian tobacco company ITC, which is worth more than £14 billion, or 27% of BTI’s entire market cap of £52 billion. On this market cap, the company expects to generate £40 billion in free cash flow over the next five years. Despite significant investments in its reduced-risk businesses, BTI’s free cash generation has remained robust, growing consistently over the past five years. Yet despite this impressive track record, the stock has traded sideways for more than a decade…” (Click here to read the full text)
A close-up of an array of tobacco products, emphasizing the selection and consumer choice.
British American Tobacco p.l.c. (NYSE:BTI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held British American Tobacco p.l.c. (NYSE:BTI) at the end of the first quarter which was 22 in the previous quarter. While we acknowledge the potential of British American Tobacco p.l.c. (NYSE:BTI) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed British American Tobacco p.l.c. (NYSE:BTI) and shared best international dividend stocks to buy. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
