Is Diageo (DEO) a Smart Long-Term Buy?

ClearBridge Investments, an investment management firm, published its “Aggressive Growth Strategy” second quarter 2022 investor letter – a copy of which can be downloaded here. The ClearBridge Aggressive Growth Strategy outperformed its Russell 3000 Growth Index benchmark in the second quarter. On an absolute basis, the Strategy had losses across the eight sectors in which it was invested (out of 11 sectors total). The primary detractors were in the IT and communication services sectors. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, ClearBridge Aggressive Growth Strategy mentioned Diageo plc (NYSE:DEO) and explained its insights for the company. Founded in 1997, Diageo plc (NYSE:DEO) is a London, United Kingdom-based multinational beverage alcohol company with a $108.7 billion market capitalization. Diageo plc (NYSE:DEO) delivered a -13.40% return since the beginning of the year, while its 12-month returns are down by -4.89%. The stock closed at $190.65 per share on August 03, 2022.

Here is what ClearBridge Aggressive Growth Strategy has to say about Diageo plc (NYSE:DEO) in its Q2 2022 investor letter:

“Diageo is a leading global distiller and brewer which addresses the large ($500 billion-plus) and fragmented market for spirits. With its portfolio of premium products, we see Diageo as a steady compounder poised for sustained, above industry growth. The company’s margins remain below pre-COVID levels in a number of geographies and should continue to recover as channels reopen, though we also see opportunities for consistent margin expansion beyond this period of rebound. The spirits category is not immune to weaker consumer spending nor inflation; however the majority of Diageo’s profits are from the U.S. market, which has historically been more resilient. Additionally, the company has a number of margin levers to help combat rising input costs.”

Public Domain/Pixabay

Our calculations show that Diageo plc (NYSE:DEO) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Diageo plc (NYSE:DEO) was in 21 hedge fund portfolios at the end of the second quarter of 2022, compared to 19 funds in the previous quarter. Diageo plc (NYSE:DEO) delivered a -5.06% return in the past 3 months.

In March 2022, we also shared another hedge fund’s views on Diageo plc (NYSE:DEO) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.