Is Reynolds American, Inc. (RAI) A Good Stock To Buy?

Seeing as Reynolds American, Inc. (NYSE:RAI) has witnessed bearish sentiment from hedge fund managers, we can see that there exists a select few money managers that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Michael A. Price and Amos Meron’s Empyrean Capital Partners sold off the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $111.3 million in stock. Carl Tiedemann and Michael Tiedemann’s fund, TIG Advisors, also sold off its stock, about $20.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 8 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Reynolds American, Inc. (NYSE:RAI). We will take a look at Sanofi SA (ADR) (NYSE:SNY), Philip Morris International Inc. (NYSE:PM), Unilever N.V. (ADR) (NYSE:UN), and Unilever plc (ADR) (NYSE:UL). This group of stocks’ market values are closest to RAI’s market value.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $1360 million. That figure was $1948 million in RAI’s case. Philip Morris International Inc. (NYSE:PM) is the most popular stock in this table with a total of 30 funds reporting long positions. On the other hand Unilever N.V. (ADR) (NYSE:UN) is the least popular one with only 13 bullish hedge fund positions. Reynolds American, Inc. (NYSE:RAI) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PM might be a better candidate to consider a long position.