We recently compiled a list of Norwegian Billionaire Halvorsen’s Top 10 Stock Picks. In this article, we are going to take a look at where Philip Morris International Inc. (NYSE:PM) stands against Halvorsen’s other top stock picks.
Ole Andreas Halvorsen, the founder and CEO of Viking Global, has built one of the most respected names in the hedge fund world. Born in Norway, Halvorson graduated with an undergraduate degree in economics from Williams College in 1986. He then later earned a postgraduate business degree from Stanford University. Having received his first taste of finance while working for Morgan Stanley, he’s part of an elite group of investors known as the “Tiger Cubs,” former protégés of hedge fund legend Julian Robertson, who went on to launch their own successful firms.
Viking Global, based in Greenwich, Connecticut, has grown into an investment powerhouse. Back in 2023, the firm delivered an impressive $6 billion in returns for its investors, ranking just behind heavyweights like Citadel and TCI. Much of this success came from smart bets on big names. In the same year, Halvorsen decided to reopen Viking Global’s long/short flagship fund to new investors. Over a decade ago, he had closed the fund, citing its size as a barrier to uncovering profitable trading opportunities.
That said, Halvorsen isn’t just about bullish bets. While long positions are Viking Global’s bread and butter, the firm has also employed strategies that allow it to profit from short positions during turbulent market years like 2020 and 2022. The billionaire firmly believes that effective and profitable trading requires careful analysis and disciplined, long-term valuation. This philosophy has shaped Viking Global’s portfolio into a balanced mix of both long-term and short-term investments. While his primary focus remains on long-term stakes in public and private companies, Halvorsen isn’t afraid to embrace “thoughtful risk-taking” to maximize returns. This balanced approach, combining strategic risk with a commitment to disciplined analysis, is at the heart of Viking Global’s success.
This year, Viking’s funds have been making a strong comeback. Its hybrid fund, Viking Global Opportunities, which invests in both public stocks and private companies, earned a modest 1% return in the third quarter, trimming its year-to-date losses to 1.6%. Meanwhile, its private-asset fund, Viking Global Opportunities Drawdown, gained 4.2% for the quarter, bringing its total return for the year to 8.3%. After a rough second quarter, these results show Viking is back on track and making waves in the investment world. Overall, as of Q3 2024, Halvorsen’s 13F portfolio reflects a strong focus on the healthcare, finance, services, and technology sectors. The portfolio’s total value stands at over $27.43 billion, marking a 1.05% increase compared to the previous quarter.
Our Methodology
For this analysis, we examined Viking Global’s stock portfolio from the third quarter of 2024. The stocks are ranked based on the firm’s stake value in each holding.
Why are we interested in 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)
Viking Global’s Q3 Stake: $1.09 billion
Number of Hedge Fund Holders: 75
Philip Morris International Inc. (NYSE:PM), a leading multinational tobacco corporation, operates in over 180 countries and is renowned for its flagship product, Marlboro, cementing its place among “Big Tobacco” leaders.
In its third-quarter earnings call, Philip Morris International Inc. (NYSE:PM) reported robust organic revenue growth and a notable year-over-year rise in adjusted diluted earnings per share. These results were driven by strong demand for its smoke-free products, IQOS and ZYN, alongside growth in the combustibles segment. IQOS volumes surged 15% year-over-year, with significant gains in Japan and Europe, while ZYN shipments in the U.S. grew by over 40%. The company also raised its full-year guidance, forecasting 2%-3% volume growth, 9.5% organic net revenue growth, and 14%-15% adjusted diluted EPS growth.
On October 30, Barclays reiterated its Overweight rating on the PM stock and raised its price target from $145 to $155. The firm views Philip Morris International Inc. (NYSE:PM) as the top-performing large-cap staple company, citing its fiscal year 2024 guidance. Expectations include 9.5% organic revenue growth, 14%-14.5% EBIT growth, and 14%-15% EPS growth excluding foreign exchange impacts. Despite a projected 6% FX headwind, EPS growth is estimated at approximately 9%, with potential to exceed 10% under more favorable FX conditions. A significant contributor to this optimism is ZYN’s strong performance in the U.S., which is expected to account for about 50% of the incremental EBIT growth and provide a meaningful boost to earnings.
Overall PM ranks 4th on our list of Halvorsen’s top stock picks. While we acknowledge the potential of PM as an investment, our conviction lies in the belief that certain 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 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.