5 Boring Stocks That Make Money

2. Philip Morris International Inc. (NYSE:PM)

Number of Hedge Fund Shareholders: 56

Trailing 12 Month Net Income: $8.72 billion

Cigarette manufacturer Philip Morris International Inc. (NYSE:PM) probably operates in one of the least desirable markets in the world if growth is your thing, as the global tobacco market is contracting at a steady pace. Despite that, the company did grow revenue by nearly 10% last year thanks to growth in its selling of smoke-free and reduced-risk tobacco products, which are steadily pushing towards a 50% share of the company’s revenue. And one thing that isn’t in doubt is PM’s ability to make money, including over $9 billion in net income last year.

Hedge fund ownership of Philip Morris International Inc. (NYSE:PM) remained steady during Q2, with 56 money managers long the stock. Rajiv Jain’s GQG Partners owns the largest stake in PM as of June 30, consisting of over 30.4 million shares worth just over $3 billion. Several other funds have greater than 6% 13F portfolio exposure to Philip Morris.

Artisan Partners, which owns 1.2 million shares of Philip Morris International Inc. (NYSE:PM) as of June 30, discussed the company’s proposed takeover of Swedish Match in the fund’s Q2 2022 investor letter:

“On the positive side of the ledger, our top contributor was Swedish Match, a Swedish tobacco and nicotine products maker. The company received an all-cash takeover offer from rival Philip Morris International Inc. (NYSE:PM), which we also held in the portfolio, for SEK 106 per share—a 35% premium to Swedish Match’s prior closing share price. The deal is a good fit for PM as it reduces PM’s dependence on cigarettes—a category in steady decline—and accelerates the company’s transition to smokeless “reduced-risk” products (RRPs)—a category that has experienced rapid growth over the past five years. PM can also leverage its global scale to generate significant revenue synergies from these complementary product sets, as well as quickly gain access to the US market—the world’s largest market for RRPs and one where regulators have embraced RRPs and other less harmful nicotine products. We exited our position in Swedish Match as shares approached the takeout price.”