“There’s a reason you see people in yoga pants all over New York City—not because they’re working out. It’s this idea that a kind of health and well-being is the new premium,” says Valerie Toothman, vice president for marketing innovation at Anheuser-Busch InBev (NYSE:BUD). As consumers are shifting towards a healthier lifestyle, big beverage companies are looking to keep up with their tastes. By using healthy-sounding names and nutrition labels, they are trying to spin alcoholic beverages as more fitness-chic. So let’s have a look at five alcohol stocks that hedge funds are betting on.
While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
#5 Diageo plc (ADR) (NYSE:DEO)
-Number of Hedge Fund Holders (as of June 30): 18
-Concentration (as of June 30): 1.3%
First up is Diageo, the British maker of spirits and beer. Hedge fund interest in this stock cooled down a bit during the second quarter, with the number of long positions having inched down to 18 at the end of June from 19 registered three months earlier. Tom Gayner‘s Markel Gayner Asset Management is among the funds betting big on Diageo plc (ADR) (NYSE:DEO), having reported ownership of 1.3 million shares worth $147 million at the end of the quarter. In the most recent quarter, the company returned to growth, as the effects of the pound devaluation and a change in accounting practices in Asia have hurt the final figures. In July, Diageo plc (ADR) (NYSE:DEO) reported its financial results for the fiscal 2016, posting a net profit of £2.24 billion ($2.94 billion), down by 5.8% year-over-year. However, organic sales were up by 2.6%, while organic volume increased by 1.3%. One of the aspects that still keeps investors on their toes is how Brexit is going to affect the company’s business. Diageo’s management said it is holding talks with the government to find ways to maintain access to markets it serves.
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#4 Ambev SA (ADR) (NYSE:ABEV)
-Number of Hedge Fund Holders (as of June 30): 21
-Concentration (as of June 30): 0.6%
Next up is Ambev, the Brazilian beverage company that has a wide beverage portfolio on top of spirits. According to our data, 21 of the funds we follow had this stock in their equity portfolio at the end of the second quarter, down from 24 a quarter before. Billionaire Ken Fisher is still bullish on Ambev SA (ADR) (NYSE:ABEV), having increased his fund’s holding of the stock by 8% to 23.7 million shares worth $138 million at the end of June. After a massive slide in 2015, Ambev stock started 2016 on the right foot and has been in an uptrend ever since, managing to advance 45% through yesterday’s closing price of $6.24 per share. The company has market cap of $95 billion and pays an annual dividend of $0.04 per share, providing investors with a 0.64% yield. Ambev SA (ADR) (NYSE:ABEV) shares are currently changing hands at a trailing Price to Earnings (P/E) ratio of 26, which is larger than the industry average P/E of 8.
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