Reynolds American, Inc. (RAI): Insiders Aren’t Crazy About It But Hedge Funds Love It

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Is Reynolds American, Inc. (NYSE:RAI) a good investment?

In the 21st century investor’s toolkit, there are tons of methods shareholders can use to monitor stocks. A couple of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can trounce their index-focused peers by a very impressive margin (see just how much).

Just as crucial, positive insider trading sentiment is a second way to look at the financial markets. As the old adage goes: there are a variety of motivations for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would buy. Various academic studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

Reynolds American, Inc. (NYSE:RAI)

Now that that’s out of the way, it’s important to discuss the newest info surrounding Reynolds American, Inc. (NYSE:RAI).

How are hedge funds trading Reynolds American, Inc. (NYSE:RAI)?

At Q2’s end, a total of 16 of the hedge funds we track were long in this stock, a change of 7% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

According to our 13F database, David Winters’s Wintergreen Advisers had the largest position in Reynolds American, Inc. (NYSE:RAI), worth close to $102.8 million, accounting for 11.2% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $82.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Ken Griffin’s Citadel Investment Group, David Harding’s Winton Capital Management and Phill Gross and Robert Atchinson’s Adage Capital Management.

As one would understandably expect, specific money managers were leading the bulls’ herd. Wintergreen Advisers, managed by David Winters, created the most valuable position in Reynolds American, Inc. (NYSE:RAI). Wintergreen Advisers had 102.8 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $82.7 million position during the quarter. The following funds were also among the new RAI investors: Ken Griffin’s Citadel Investment Group, David Harding’s Winton Capital Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

How are insiders trading Reynolds American, Inc. (NYSE:RAI)?

Insider buying made by high-level executives is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the last 180-day time period, Reynolds American, Inc. (NYSE:RAI) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Reynolds American, Inc. (NYSE:RAI). These stocks are Vector Group Ltd (NYSE:VGR), Philip Morris International Inc. (NYSE:PM), British American Tobacco PLC (ADR) (NYSEAMEX:BTI), Altria Group Inc (NYSE:MO), and Lorillard Inc. (NYSE:LO). This group of stocks are the members of the cigarettes industry and their market caps match RAI’s market cap.

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