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Should You Light Up An Investment In Reynolds American, Inc. (RAI)?

Judging by the fact that Reynolds American, Inc. (NYSE:RAI) has faced a decline in interest from the smart money, it’s safe to say that there was a specific group of fund managers that decided to sell off their positions entirely in the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $10.2 million in stock. David Costen Haley’s fund, HBK Investments, also dumped its stock, about $6.9 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 fund in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Reynolds American, Inc. (NYSE:RAI). We will take a look at Celgene Corporation (NASDAQ:CELG), AstraZeneca plc (ADR) (NYSE:AZN), Lockheed Martin Corporation (NYSE:LMT), and Union Pacific Corporation (NYSE:UNP). This group of stocks’ market caps are similar to RAI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CELG 67 2567429 -1
AZN 27 669117 3
LMT 34 755807 -5
UNP 62 2502901 7

As you can see these stocks had an average of 47.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.62 billion. That figure was $1.07 billion in RAI’s case. Celgene Corporation (NASDAQ:CELG) is the most popular stock in this table. On the other hand AstraZeneca plc (ADR) (NYSE:AZN) is the least popular one with only 27 bullish hedge fund positions. Reynolds American, Inc. (NYSE:RAI) is not the least popular stock in this group but hedge fund interest is still below average and has been flat for 2 quarters. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CELG or UNP might be better candidates to consider for long positions.

Disclosure: None

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