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The alcoholic beverage market is a low growth market with defensive characteristics. It is a mature industry in U.S. and Western Europe. However, the growth rates are relatively higher in developing countries such as India, China, and Russia. Recently hedge funds started to show some interest in this field as well. Bill Ackman’s Pershing Square bought a significant stake in Fortune Brands (FO) and Whitney Tilson’s T2 Partners have a large Anheuser-Busch InBev (NYSE:BUD) position in his portfolio.

We've summarized hedge fund holdings in top alcoholic beverage stocks. We follow 300+ hedge funds. The industry classifications and returns are obtained from Yahoo. Here are the top alcoholic beverage stocks that hedge funds favored the most at the end of December:

CompanyName

Ticker

No. of Funds

Value

ANHEUSER BUSCH INBEV SA NV

BUD

26

570,857

DIAGEO PLC

DEO

16

491,921

MOLSON COORS BREWING CO

TAP

24

259,366

BROWN FORMAN CORP

BF

12

165,668

CONSTELLATION BRANDS INC

STZ

12

45,783

COMPANIA CERVECERIAS UNIDAS S A

CCU

4

32,744

FOMENTO ECONOMICO MEXICANO S

FMX

7

31,844

CENTRAL EUROPEAN DISTRIBUTN CORP

CEDC

8

31,703

BOSTON BEER INC

SAM

10

30,765

CRAFT BREWERS ALLIANCE INC

HOOK

4

8,909

VINA CONCHA Y TORO S A

VCO

1

456

CHINA NEW BORUN CORP

BORN

2

406

Anheuser Busch (BUD) tops our list with 26 hedge funds owning $526 million in stock. Tom Russo’s Gardner Russo & Gardner had nearly $250 million invested in BUD at the end of March. Robert Rodriguez’s First Pacific Advisors, John Burbank’s Passport Capital, and Brookside Capital also have large BUD holdings.

Diageo Plc had the third highest number of hedge funds holding the stock but it had the second highest dollar amount invested. Sixteen hedge funds invested nearly $500 Million in DEO. Again Tom Russo tops the list with a $119 million investment. Tom Gayner’s Markel Gayner, Harris Associates, and John Osterweis’ Osterweis Capital are among the fund with large investments in DEO as well.

Twenty-four hedge funds had more than $250 million in Molson Coors Brewing Co (NYSE:TAP) at the end of March. Chris Hohn’s Childrens Investment Fund had by far the largest position in TAP among 300+ hedge funds we are tracking. Vinit Bodas’ Deccan Value Advisors, Reid Walker’s WS Capital, and Ken Griffin’s Citadel were the other hedge funds with relatively large investments in TAP.

The fourth most popular alcoholic beverage stock is Brown Forman (BF). There were 12 hedge funds with $165 million investments in the stock. Tom Russo is also the largest holder in BF. A fifth stock that attracted our attention is Central European Distribution Corp. (NASDAQ:CEDC). There were eight hedge funds in this stock but the reason we are interested in this stock is that there have been several insider purchases in 2011 after the company’s stock lost half of its value.

Vina Concha (NYSE:VCO) and China New Borun (NYSE:BORN) are at the bottom of our list and don’t have meaningful hedge fund holdings. That’s why we recommend investors who don’t mind owning some “vice” in their portfolios to consider the top 10 names for their portfolios.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Top Alcoholic Beverage Stocks That Hedge Funds Love