MO - Altria Corp

[orion]

I don't think it's public. I haven't ever seen them go much into detail as to how exactly the arrangement work, but I've been surprised that they haven't pursued IQOS harder, so perhaps the incentives aren't right. Don't know.

 

Thank you for your answer, but really annoying that this info is a "secret". :(

[kab60]

Revenue up more than 5 pct. in 2020, share buyback announced (though only 2b), expect 3-6 pct. EPS growth in 2021. At more than a 10 pct. earnings yield it's pretty easy to see a plus 15 pct. annual return without any multiple rerating, and then you have tremendous pricing power for inflation protection, optionality in BUD stake/increased buybacks plus IQOS. Not a bad place to be in an otherwise somewhat nutty environment.

[Gamecock-YT]

How Tobacco Giant Altria Is Becoming A Cannabis Company

 

https://www.forbes.com/sites/chrisroberts/2021/02/09/tobacco-giant-altria-is-pushing-marijuana-reform-on-congress-and-state-lawmakers/

[MattR]

How Tobacco Giant Altria Is Becoming A Cannabis Company

 

https://www.forbes.com/sites/chrisroberts/2021/02/09/tobacco-giant-altria-is-pushing-marijuana-reform-on-congress-and-state-lawmakers/

 

There is no doubt in my mind that they will also dominate the cannabis market. Their brands just have a long history of consistency and longevity.

[DooDiligence]

The feeling you get when you're sure management can't incinerate enough cash to kill your equity.

 

[DooDiligence]

Gifford said Cronos is making strides with its growth strategy in the active cannabis space.

 

I have my doubts.

 

www.barrons.com/articles/pot-stock-cronos-is-slipping-its-loss-was-wider-than-expected-51614353228

[BHarpur]

Thoughts?

 

https://www.wsj.com/articles/biden-administration-considering-rule-to-cut-nicotine-in-cigarettes-11618859564

[MattR]

2 hours ago, BHarpur said:

Thoughts?

 

https://www.wsj.com/articles/biden-administration-considering-rule-to-cut-nicotine-in-cigarettes-11618859564

While I think it is a valid concern, people won't just stop smoking just because of some regulation. We saw during prohibition how well that worked out. The alternatives are all owned by Altria, Phillip Morris or BAT.

It might make a small difference to their bottom line,  but I don't think the 6% decline is justified.

Edited April 20, 2021 by MattR

[Castanza]

Wouldn't this be a plus for big tobacco?

Less nicotine = more cigarettes' smoked to get your fix = more sales?

[JRM]

Instead of buying more cigarettes it would probably become more cost effective for customers to switch to alternative products (Altria's stated strategy).  This seems like a bit of an overreaction to something that hasn't happened, and will take a long time if it ever happens.  I would be stockpiling cigarettes for the next year in anticipation.

MO has been a trending stock, so this looks like a flush out of some fast money (to me anyways), probably algo driven.  

If you were long Altria before, I'm not sure what this changes.  

Edited April 20, 2021 by JRM

[DooDiligence]

A strong gut is required to own tobacco. In the long run, I’d be more concerned with management lighting another pile of cash on fire.

[no_free_lunch]

3 hours ago, Castanza said:

Wouldn't this be a plus for big tobacco?

Less nicotine = more cigarettes' smoked to get your fix = more sales?

I was thinking along the same lines.  Which might make it actually worse for your health.

It seems strange to be banning tobacco while at the same time there is talk about legalizing more and more drugs.  I get that tobacco is just another drug but therefore we should learn the same lesson from the drug war / prohibition.

[ERICOPOLY]

 

5 hours ago, no_free_lunch said:

I was thinking along the same lines.  Which might make it actually worse for your health.

It seems strange to be banning tobacco while at the same time there is talk about legalizing more and more drugs.  I get that tobacco is just another drug but therefore we should learn the same lesson from the drug war / prohibition.

Tobacco use increases the addictiveness of those other drugs. 

 

quote:

"Thus, nicotine makes it easier for other drugs to teach users’ brains to repeat their use."

https://www.drugabuse.gov/about-nida/noras-blog/2018/09/recent-research-sheds-new-light-why-nicotine-so-addictive#:~:text=Kandel have identified a molecular,brains to repeat their use.

 

Edited April 20, 2021 by ERICOPOLY
clarification

[Spekulatius]

I sold the MO held in my tax deferred accounts around $48. A legislation like this was a latent threat, but now it seems an imminent one. I am not sure how a switch to alternative products is going to play out, both in terms of market size and profit margins.

Also note for the Menthol cigarettes , MA already banned those last year, so changes are possible and relatively short order.

I do think some haircut is well justified for the increased uncertainty. This stock came of a tremendous run from ~$36 to $50+ with some dividend payments along the way. If the stock really craters I will happily get back in again.

Edited April 20, 2021 by Spekulatius

[LC]

Well, I'm going with history. I've said it a few times - humans have been smoking for 2000+ years. I don't think anyone is going to change that. 

[no_free_lunch]

Eric yours is just an argument for why tobacco is bad. NOBODY is arguing otherwise. You win, we get it, tobacco is addictive and sure maybe it makes you receptive to other drugs.  Guess what though, same is true for other drugs. Why push for legalization of some but make tobacco illegal?  There is no way you can stop it. People will just smuggle it. Cops won't enforce the laws. You just deprive yourself of tax revenue. 

[MattR]

6 hours ago, Spekulatius said:

I sold the MO held in my tax deferred accounts around $48. A legislation like this was a latent threat, but now it seems an imminent one. I am not sure how a switch to alternative products is going to play out, both in terms of market size and profit margins.

Also note for the Menthol cigarettes , MA already banned those last year, so changes are possible and relatively short order.

I do think some haircut is well justified for the increased uncertainty. This stock came of a tremendous run from ~$36 to $50+ with some dividend payments along the way. If the stock really craters I will happily get back in again.

I personally think this is overdone. A lot of people are already switiching to non-combustiables and an addict won't stop smoking, in contrary alcoholics who drink light beer, just drink more to get their fix. Regulations generally favor the big players and MO and BTI are the biggest of them all.

[ERICOPOLY]

On 4/20/2021 at 7:06 PM, no_free_lunch said:

Eric yours is just an argument for why tobacco is bad. NOBODY is arguing otherwise. You win, we get it, tobacco is addictive and sure maybe it makes you receptive to other drugs.  Guess what though, same is true for other drugs. Why push for legalization of some but make tobacco illegal?  There is no way you can stop it. People will just smuggle it. Cops won't enforce the laws. You just deprive yourself of tax revenue. 

Are you through with the "you win" crap?  Go back and read again what I wrote.  What exactly triggers you to be so reactive?

[JRM]

https://news.bloomberglaw.com/class-action/altria-juul-to-face-suit-over-13-billion-deal-judge-signals

 

lol.  what a joke.

[Dalal.Holdings]

8 hours ago, JRM said:

https://news.bloomberglaw.com/class-action/altria-juul-to-face-suit-over-13-billion-deal-judge-signals

 

lol.  what a joke.

 

Quote

He also signaled he’ll give a green light to the part of the case seeking to roll back the transaction under Section 7 of the Clayton Act. The tentative ruling comes two months after a federal appeals court for the first time agreed to unwind a merger in response to a challenge by a rival rather than a regulator.

Does MO get its $12.8B back? 

[JRM]

haha, I wish.  that'd be great.  if only life had a reset button for bad decisions.

so in the past week or two we've had government action in the form of a lawsuit against Altria\Juul, proposed tax increase on tobacco, and a proposed reduction in nicotine content for cigarettes.  

[Spekulatius]

38 minutes ago, JRM said:

haha, I wish.  that'd be great.  if only life had a reset button for bad decisions.

so in the past week or two we've had government action in the form of a lawsuit against Altria\Juul, proposed tax increase on tobacco, and a proposed reduction in nicotine content for cigarettes.  

..and of course the general federal tax increase from 20% to 25% but that's not exclusive to MO or BTI of course.

[DooDiligence]

1 hour ago, Spekulatius said:

..and of course the general federal tax increase from 20% to 25% but that's not exclusive to MO or BTI of course.

Welcome to fight club.

[Castanza]

2 hours ago, JRM said:

haha, I wish.  that'd be great.  if only life had a reset button for bad decisions.

so in the past week or two we've had government action in the form of a lawsuit against Altria\Juul, proposed tax increase on tobacco, and a proposed reduction in nicotine content for cigarettes.  

And for weed we have multiple states saying they will legalize it  

[Spekulatius]

1 hour ago, Castanza said:

And for weed we have multiple states saying they will legalize it  

Weed competes with booze, not with nicotine. I do think that weed will become legal (on a federal level) within this decade - the demographic trends make it almost impossible not to legalize it.