With The EU’s War on Smoking, Here Are Hedge Fund’s Favorite Tobacco Stocks

#3 Reynolds American, Inc. (NYSE:RAI)

– Number of Hedge Fund Holders (as of March 31): 39
– Total Value of Hedge Fund Holdings (as of March 31): $1.69 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 2.40%

Reynolds American, Inc. (NYSE:RAI) was in 39 top hedge fund portfolios in the first quarter, making the stock the third most widely held cigarette stock in the elite fund universe. Like other tobacco stocks, Reynolds American shares have performed well, rallying 9% year-to-date. Shareholders have been buying the stock because Reynolds American pays a dividend yield of over 3.3% and trades for a decent forward P/E of 19. The bad news aspect of the British ruling might also be overblown. England only accounts for a small part of total global tobacco demand and it is unclear how much demand in England will be affected by the new laws. It is also unclear whether other countries will follow progressive England’s lead.

#2 Altria Group Inc (NYSE:MO)

– Number of Hedge Fund Holders (as of March 31): 41
– Total Value of Hedge Fund Holdings (as of March 31): $1.76 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 1.40%

Sin continues to pay as Altria Group Inc (NYSE:MO) shares have rallied 9.6% year-to-date as dividend investors snap up the stock for its 3.5% dividend yield and its notoriously stable demand. Because Altria mainly sells its tobacco inside the United States, the company isn’t as affected by the ruling as other companies with more international exposure. For full year 2016, Altria expects adjusted diluted EPS of $3-$3.05, giving the stock a price-to -2016-earnings ratio of 21. Cliff Asness’ AQR Capital Management owned 3.4 million shares at the end of March.