What are billionaires playing with? While closing all positions in tobacco stocks, they are frantically buying this tech giant.

Have you ever thought about what information the trading movements of top hedge fund managers in Q3 might reveal? There's an interesting phenomenon recently:

Tobacco companies face a downturn

Philip Morris International ( PM ) has risen by 27% this year, but has started to lag since July. Both big players liquidated their positions in Q3:

• Druckenmiller's Duquesne Family Office sold 816,000 shares
• Coatue Management's Laffont has completely exited, selling 1.3 million shares.

Where is the problem? The growth of the company’s smoke-free nicotine product Zyn seems strong with a year-on-year increase of 17.7% in Q3 (, but after the Q2 financial report was released, investors began to worry whether this new product could actually defeat its competitors. Additionally, the valuation had soared to 25 times the forward PE, which is a bit frightening.

However, the dividend yield of PM is still good - trailing a December dividend yield of 3.6% and a free cash flow yield of 4.2%, which is considered a good income choice.

Turning around and buying Google like crazy

Interestingly, these hedge fund moguls immediately bought Alphabet)GOOG/GOOGL(:

• Coatue bought 2.1 million shares
• Duquesne bought 102,000 shares
• Buffett's Berkshire directly invested $4.3 billion to acquire 17.8 million shares.

Why is everyone optimistic about Google? The reason is clear:

1. Regulatory Risk Removal - Last year, a US judge rejected the forced sale of the Chrome browser by Google, which is the best news for Alphabet.
2. AI Concerns Fade - The ChatGPT threat is no longer as scary, and the market is starting to believe that Google's AI search can compete.
3. Valuation Cost-Effectiveness - Google's forward PE is less than 28 times, which is considered cheap among the “Seven Giants”.

Investment Insights

This signal is clear: savvy large funds are shifting from traditional high-dividend stocks to core assets of the AI era. Although these trades occurred months ago, they are indeed worth noting when combined with the current fundamentals.

Of course, don't blindly follow the trend - you still need to do your own research to confirm whether the logic holds.