Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Altria Group Inc (NYSE:MO).
Is MO a good stock to buy now? The smart money was in a bullish mood. The number of long hedge fund positions improved by 4 lately. Altria Group Inc (NYSE:MO) was in 47 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 54. Our calculations also showed that MO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 43 hedge funds in our database with MO positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this cannabis tech stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to review the key hedge fund action encompassing Altria Group Inc (NYSE:MO).
Do Hedge Funds Think MO Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the second quarter of 2020. By comparison, 53 hedge funds held shares or bullish call options in MO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Altria Group Inc (NYSE:MO), which was worth $352.7 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $140.2 million worth of shares. Hengistbury Investment Partners, AQR Capital Management, and Citadel Investment Group 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 Hengistbury Investment Partners allocated the biggest weight to Altria Group Inc (NYSE:MO), around 15.32% of its 13F portfolio. Callodine Capital Management is also relatively very bullish on the stock, dishing out 6.17 percent of its 13F equity portfolio to MO.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Altria Group Inc (NYSE:MO). Arrowstreet Capital had $73.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $11.5 million position during the quarter. The other funds with new positions in the stock are Michael Burry’s Scion Asset Management, Paul Tudor Jones’s Tudor Investment Corp, and Joe DiMenna’s ZWEIG DIMENNA PARTNERS.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Altria Group Inc (NYSE:MO) but similarly valued. These stocks are JD.Com Inc (NASDAQ:JD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), KE Holdings Inc (NYSE:BEKE), Snowflake Inc (NYSE:SNOW), Booking Holdings Inc. (NASDAQ:BKNG), Crown Castle International Corp. (NYSE:CCI), and Deere & Company (NYSE:DE). This group of stocks’ market caps are closest to MO’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 60.6 hedge funds with bullish positions and the average amount invested in these stocks was $4721 million. That figure was $1260 million in MO’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand KE Holdings Inc (NYSE:BEKE) is the least popular one with only 28 bullish hedge fund positions. Altria Group Inc (NYSE:MO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MO is 46.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately MO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MO investors were disappointed as the stock returned 9.3% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.