Is Philip Morris International Inc. (NYSE:PM) an outstanding investment right now? The best stock pickers are taking a pessimistic view. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
To the average investor, there are dozens of methods shareholders can use to track publicly traded companies. A duo of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite investment managers can outperform the market by a solid amount (see just how much).
Equally as important, optimistic insider trading activity is another way to parse down the marketplace. Just as you'd expect, there are a number of stimuli for an insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this method if shareholders know where to look (learn more here).
Now, we're going to take a glance at the latest action regarding Philip Morris International Inc. (NYSE:PM).
At the end of the first quarter, a total of 49 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes considerably.
Of the funds we track, Tom Russo's Gardner Russo & Gardner had the most valuable position in Philip Morris International Inc. (NYSE:PM), worth close to $818.1 million, comprising 9.6% of its total 13F portfolio. Coming in second is Ken Fisher of Fisher Asset Management, with a $516 million position; 1.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Phill Gross and Robert Atchinson's Adage Capital Management and Jim Simons's Renaissance Technologies.
Since Philip Morris International Inc. (NYSE:PM) has witnessed a declination in interest from the entirety of the hedge funds we track, it's safe to say that there was a specific group of money managers who sold off their positions entirely last quarter. Intriguingly, Ken Heebner's Capital Growth Management cut the largest investment of the 450+ funds we watch, totaling close to $26.8 million in stock., and Daniel S. Och of OZ Management was right behind this move, as the fund dropped about $23.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying is particularly usable when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Philip Morris International Inc. (NYSE:PM) has seen 1 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to Philip Morris International Inc. (NYSE:PM). These stocks are Vector Group Ltd (NYSE:VGR), Lorillard Inc. (NYSE:LO), Reynolds American, Inc. (NYSE:RAI), Altria Group Inc (NYSE:MO), and British American Tobacco PLC (ADR) (NYSEAMEX:BTI). This group of stocks are the members of the cigarettes industry and their market caps are similar to PM's market cap.