Hugh Hendry’s Eclectica Asset Management Is Still Betting Big on Tobacco Stocks

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Hugh Hendry’s Eclectica Asset Management has filed its Form 13F with the U.S. Securities and Exchange Commission for the reporting period of March 31. Hendry founded London-based Eclectica Asset Management in 2005 and the fund made a name for itself in 2008 when it managed to return 31.2% during a year in which many hedge funds had negative returns. Despite losing more than 4% through the first eight months of 2014, the fund returned more than 12% in the following three months to lift it to returns of 7.8% for the year through November 2014. Eclectica’s latest 13F revealed an equity portfolio valued at $38.3 million, with the portfolio containing a total of 30 long positions, mostly in consumer staples and materials sector companies. The investor’s largest stakes reside within a very narrow niche of the consumer staples sector: tobacco. We’ll take a look at those top stocks, Reynolds American Inc. (NYSE:RAI), Altria Group Inc (NYSE:MO), and Philip Morris International Inc. (NYSE:PM) in this article.

Hugh Hendry - Eclectica Asset Management


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First we will discuss Reynolds American Inc. (NYSE:RAI), the top holding of Hendry’s fund, which reported owning 56,000 shares of the company valued at $3.88 million. The stake remained unchanged over the quarter. North Carolina-based tobacco company Reynolds American Inc. (NYSE:RAI) has a market cap of $40.5 billion. The company’s stock currently trades at $75.70, moving up by over 16% during the last five months. Reynolds American Inc. (NYSE:RAI) reported better than expected financial results for the first quarter of 2015, posting revenues of $2.1 billion, beating analysts’ estimates of about $2.0 billion. The company’s adjusted net income for the quarter was $457 million, representing a significant increase from the $386 million it earned in the same quarter of 2014. Other large shareholders of Reynolds American Inc. (NYSE:RAI) include David Winters’ Wintergreen Advisers and Ken Griffin’s Citadel Investment Group, who both reported holding big positions in the company at the end of 2014.

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