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Should Value Investors Buy Constellation Brands (STZ) Stock?

Value Investor Insight is an investment newsletter created by money manager Whitney Tilson and John Heins. Value Investor Insight aims to deliver the highest-quality investment ideas, analysis, and insight to the just-starting-out investor and sophisticated investors. At the core of Value Investor Insight is the philosophy of the true value investor: buy something only for less than its intrinsic worth. In a recent edition of Value Investor Insight, Harris Associates’ Bill Nygren highlighted the top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. You can download a copy of Value Investor Insight here.

In the said letter, Bill Nygren highlighted a few stocks and Constellation Brands Inc. (NYSE:STZ) is one of them. Constellation Brands is producer and marketer of beer, wine and spirits. Year-to-date, Constellation Brands Inc. (NYSE:STZ) stock lost 8.1% and on June 23rd it had a closing price of $180.46. Here is what Bill Nygren said:

“Another stock we added was Constellation Brands [STZ], the large importer of popular Mexican beer labels, including Modelo, Pacifico, and to their misfortune, Corona. The big market concern seemed to be that people are not going to bars any more, which is true, but we concluded that the 15% of Constellation’s sales from restaurants and bars could be largely offset by increased consumption at home. We think it’s very possible earnings won’t go down at all even this year, but the stock price had been cut in half. That made it interesting to us.”

In Q1 2020, the number of bullish hedge fund positions on Constellation Brands Inc. (NYSE:STZ) stock decreased by about 4% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Constellation Brands upside potential. Our calculations showed that Constellation Brands Inc. (NYSE:STZ) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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

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