Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Altria Group Inc (NYSE:MO) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Altria Group Inc (NYSE:MO) was in 45 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 54. MO has seen a decrease in hedge fund interest of late. There were 47 hedge funds in our database with MO positions at the end of the second quarter. Our calculations also showed that MO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a peek at the recent hedge fund action encompassing Altria Group Inc (NYSE:MO).
John Overdeck of Two Sigma Advisors
Do Hedge Funds Think MO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MO over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Altria Group Inc (NYSE:MO), with a stake worth $126.7 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $119.8 million. Arrowstreet Capital, Two Sigma Advisors, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Plaisance Capital allocated the biggest weight to Altria Group Inc (NYSE:MO), around 5.2% of its 13F portfolio. Callodine Capital Management is also relatively very bullish on the stock, dishing out 4.54 percent of its 13F equity portfolio to MO.
Judging by the fact that Altria Group Inc (NYSE:MO) has witnessed a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their positions entirely last quarter. It’s worth mentioning that Benjamin A. Smith’s Laurion Capital Management sold off the biggest position of all the hedgies followed by Insider Monkey, totaling close to $21.5 million in call options. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also cut its call options, about $10.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Altria Group Inc (NYSE:MO) but similarly valued. We will take a look at Brookfield Asset Management Inc. (NYSE:BAM), Mercadolibre Inc (NASDAQ:MELI), Blackstone Inc. (NYSE:BX), The PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), Canadian National Railway Company (NYSE:CNI), and Mondelez International Inc (NASDAQ:MDLZ). All of these stocks’ market caps match MO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BAM | 32 | 2498829 | -2 |
| MELI | 68 | 4371182 | -6 |
| BX | 54 | 2545773 | 0 |
| PNC | 41 | 506241 | 3 |
| EQNR | 11 | 163324 | 0 |
| CNI | 42 | 7392349 | 2 |
| MDLZ | 46 | 1922079 | -7 |
| Average | 42 | 2771397 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $2771 million. That figure was $830 million in MO’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand Equinor ASA (NYSE:EQNR) is the least popular one with only 11 bullish hedge fund positions. Altria Group Inc (NYSE:MO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MO is 57.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on MO as the stock returned 13.9% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Altria Group Inc. (NYSE:MO)
Follow Altria Group Inc. (NYSE:MO)
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Disclosure: None. This article was originally published at Insider Monkey.
