Tobacco.org

Stocks To Watch Today : Doubting AmEx; Smoke Or Fire At UST; Collective Strides Rite 

There's no smoke, but somebody thinks there's a fire brewing at UST (UST). The smokeless tobacco products maker has been the subject of myriad rumors that it might be in the cross-hairs of a bigger tobacco player - Altria (MO) being the name that comes up most frequently - that would be interested in expanding beyond the traditional cigarette business. UST effectively fanned the flames Thursday. The company aburptly canceled a scheduled appearance at a Lehman Brothers conference on consumer companies. UST said the executives expected to make the presentation, including CEO Murray Kessler, had a ''scheduling conflict," and then declined to elaborate.

Jump to full article »

Next Mayor Won’t Need a Wallet Nearly as Big 

Mr. Bloomberg and the city's public advocate, Betsy Gotbaum, also disclosed their financial holdings on Wednesday.

Ms. Gotbaum, who in her last disclosure reported a stock portfolio valued at $184,000 to $1.2 million, as part of her holdings, successfully sought to keep the latest list of her individual stock holdings private. The list covering 2006 included names such as Altria, the owner of the cigarette maker Philip Morris, and Halliburton, the defense contractor.

This time around, instead of disclosing her stocks one by one, Ms. Gotbaum's disclosure form simply indicates that stocks she holds are currently managed by Sanford C. Bernstein & Company, in accounts totaling $200,000 to $500,000.

A Gotbaum spokeswoman said the city determined she did not have to list the individual stocks as long as an investment manager, rather than she, chose the stocks.

Jump to full article »

Altria Group increases quarterly dividend by 10 percent to 32 cents a share 

Jump to full article »

BeaconEquity.com Issues Trade Alerts on Tobacco/Consumer Good Stocks: STSI, PM, BTI, MO, RAI, LO 

Today's Trade Alerts include: Star Scientific Inc. (Nasdaq: STSI), Philip Morris International Inc. (NYSE: PM), British American Tobacco plc (Amex: BTI), Altria Group Inc. (NYSE: MO), Reynolds American Inc. (NYSE: RAI) and Lorillard Inc. (NYSE: LO).

Jump to full article »

Your Money - Socially Responsible, With Egg on Its Face  

When the news broke late last month, it read almost like satire. The Securities and Exchange Commission had charged a mutual fund company that specialized in socially responsible investments with taking stakes in companies involved with alcohol, gambling and military contracting.

But it is a true story, and it’s the first time the S.E.C. has encountered this problem. Pax World, one of the oldest practitioners in the field of socially responsible investing, paid a $500,000 penalty. . . .

In the first half of the decade, Pax World had strict rules about what its mutual funds could not invest in, though they've since become a bit looser. The list of taboos included companies engaged in military activities, ones that derived more than 5 percent of gross sales from Defense Department contracts, and businesses that made money from liquor, tobacco or gambling. "The Funds' policy is to invest in securities of companies producing goods and services that improve the quality of life," its materials stated at the time.

The restrictions are known in the field as negative screens. When the S.E.C. showed up in late 2003 and 2004 to conduct a routine examination, it checked to see if Pax World was complying with the screens that it had outlined in its fund prospectuses. The examiners didn't like what they found, and they referred the matter to the S.E.C.'s enforcement staff.

Here's what the enforcement staff discovered later: 10 securities in 2 mutual funds -- the Pax World Growth Fund and its High Yield Fund -- violated Pax World's various negative screens. The fund managers had bought 6 of those securities even though Pax World had already screened the companies and placed them on the banned list.

The other four ended up in the portfolios without anyone screening them first, violating the fund's own rule that it had to review any securities that its managers wanted to purchase.

In an interview, Pax World's president and chief executive, Joseph F. Keefe, who joined the company after the transgressions occurred, seemed as surprised as anyone that Pax World employees didn't follow the rules. . . .

If you believe that sustainable investing is at least better than throwing up your hands and bringing no principles to your portfolio, an exchange-traded fund called the iShares KLD Select Social Index Fund is worth a look. While it does screen out tobacco firms, the rest of the index is composed of best-of-breed companies in other industries, based on seven criteria, including corporate governance and environmental standards.

Jump to full article »

S&P 500 Stocks' Average Analyst Ratings by Industry (Table)  

The following table ranks the average analyst ratings for stocks in the Standard & Poor's 500 Index by industry. . . .

Recommendations

Food Beverage & Tobacco Rating Buy Hold Sell Total

=====================================================================

LO Lorillard Inc. 5.000 8 0 0 8

PM Philip Morris Intl 4.538 10 3 0 13

MO Altria Group Inc. 4.357 10 4 0 14

UST UST Inc. 4.111 6 2 1 9

KFT Kraft Foods Inc. 3.444 5 12 1 18

RAI Reynolds American Inc. 3.364 3 7 1 11

Jump to full article »

Altria Group, Inc. Q2 2008 Earnings Call  

Executives

Clifford B. Fleet - VP, IR

David R. Beran - EVP and CFO

Analysts

Nik Modi - UBS

Judy Hong - Goldman Sachs

Christine Farkas - Merrill Lynch

David Adelman - Morgan Stanley

Ann Gurkin - Davenport

Filippe Goossens - Credit Suisse

Adam Spielman - Citigroup . . .

Clifford B. Fleet - Vice President, Investor Relations

Good morning, and thank you for joining our call. This morning we will discuss Altria's second quarter 2008 business results. Our remarks contains forward-looking statements and projections of future results and I direct you to the Safe Harbor statement at the end of our earnings release for review of the various factors that could cause actual results to differ materially from projections.

As a result of the spin-off of Philip Morris International earlier this year, our reported results reflect PMI as a discontinued operation for the second quarter of 2007. And revenues and operating company's income for PMI are therefore excluded from Altria's continuing results. For a detailed review of Altria second quarter business results, please the earnings release that is available on our website, altria.com. Please note that in this morning's call, we will only be discussing the second quarter business results and we will not be discussing the status of litigation.

Jump to full article »

• Big Funds Eye Reinvesting in Tobacco Firms  

In a potentially devastating blow to the movement toward "socially responsible" investing, California's public pension fund system is considering reversing its policy of refusing to invest in tobacco companies. The California State Teachers' Retirement System, the nation's third-largest public pension fund with $162 billion in assets, could vote as early as this fall on a plan to start buying tobacco stocks, which it has shunned since 2000.

The $248 billion California Public Employees' Retirement System, the nation's largest, is also monitoring the issue. . . .

"Investing in socially responsible stocks just because they are socially responsible is not -- underline not -- a valid investment thesis," a senior investment consultant for the Northern Trust Company, Steven Pines, said.

Socially responsible investing is a $2.71 trillion market, according to the advocacy group Social Investment Forum, but its performance has lagged behind the overall market.

Jump to full article »

Tobacco One, Inc. Issues Comment on Unauthorized E-mail Campaign 

Tobacco One, Inc. (Pink Sheets: TBCO), or “the Company,” distributor of specialty cigarettes, cigars and other tobacco products (OTP), today announced that it has recently been made aware of a widespread unauthorized dissemination of information in the form of an unsolicited e-mail campaign, which appears to have been initiated by a third party.

“This campaign was initiated without the knowledge of the Company, its management or Premier Media Services, Inc., the Company’s designated investor relations firm,” stated Shawn Ulizio, CEO, Tobacco One.

Jump to full article »

Don't want to quit Rothmans? Just say no 

No tobacco company is ever going to score highly on the warm-and-fuzzy scale. But Rothmans took the "only-investors-matter" approach to extremes. With some of the fattest profit margins in Corporate Canada, the company can afford some sweet downtown office space. Instead it occupies a tower in a dumpy part of Toronto, close to nothing. Management does zero to court the press and eschews image makers. The company's head of corporate affairs - a title that in many companies is reserved for a professional spin doctor - is actually an ex-tobacco salesman.

The parsimony extends to how it pays management. . . .

The company is a textbook case of how it's usually better not to dilute a great business by diversifying into other, inferior businesses. (Had some other Canadian consumer firms learned that lesson - Labatt and Molson, we're looking at you - they might have retained their independence.) Rothmans refused to make wacky acquisitions. They simply let the cash pile up. When the pile got too high, they paid it out. You could have bought a share of the company for $8 seven years ago, collected $11.73 in dividends since then, and still own a security that's now worth nearly $30.

This, remember, is in a declining industry. . . .

Philip Morris is not really paying a knockout price. As part of the deal, it also got Rothmans to cancel its dividend, taking $24-million out of shareholders' pockets. (See Andy Willis' Streetwise blog for more on that.)

For investors, replacing Rothmans won't be easy.

Jump to full article »

Reynolds American: 6% Yield Shows Commitment to Shareholders 

Reynolds American (RAI), the second biggest cigarette manufacturer in the United States, presents an opportunity for the discerning investor. While the legal pressures facing the tobacco industry have receded modestly, this positive development has been more than overshadowed by the specter of the FDA oversight bill Congress is reviewing. This bill would allow the FDA to regulate cigarette composition (with several exceptions) and would serve to solidify rival Phillip Morris USA's dominant position in the US market. It appears the bill is dead for the foreseeable future, as a vowed filibuster by Senate Republicans and a threatened Presidential veto thwart its advance for the near-term. . . .

All said, RAI is a company with solid future prospects. Management's demonstrably shareholder-friendly approach, the soundness of long-term plans put forth by executives and the considerable liquidity generated by operations all bode well for the prudent investor. However, it is important to note that uncertainty hanging over tobacco companies engendered by lawsuits will not dissipate in the foreseeable future.

Jump to full article »

Rothmans dividend machine snuffed out 

One of the great Canadian dividend plays is being snuffed out, as cash-spinning cigarette maker Rothmans accepts a $2-billion takeover bid from Philip Morris International.

Recall the famous line from Warren Buffett: "I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive. And there's fantastic brand loyalty."

To that line of reasoning, add the fact that the folks at Rothmans paid out an incredibly dependable 5 per cent dividend, and added in the occasional chunky special dividend when the coffers started to overflow.

For income-addicted investors who could get past Rothmans' line of business, this stock was a core holding. The cigarette company becomes even more attractive as income trusts head for extinction.

Philip Morris, 40-per-cent partner in the Canadian company's Rothmans Benson & Hedges operating subsidiary, is obviously attracted to that same cash flow, hence the friendly takeover.

Jump to full article »

• KEAST: The CPP should butt out 

At the same time Ottawa is trying to get Canadians to stop smoking through ads, high taxes, age restrictions and dire health warnings on every cigarette pack, the Canada Pension Plan Investment Board (CPPIB), the federal Crown corporation that manages the assets of the Canada Pension Plan, is pouring hundreds of millions of dollars into tobacco stocks. As of March 31, 2008, its tobacco holdings had a market value of more than $490-million. . . .

like it or not, part of your premiums have been used to buy huge stakes in some of the world's biggest tobacco companies. These holdings include $165-million stake in Philip Morris International and a $72-million investment in Altria, which controls half the U. S. cigarette market.

Your CPP contributions have also been used to buy $38-million worth of British American Tobacco, the world's #2 tobacco firm (behind Altria Group) and a company that sells nearly 855 billion cigarettes in more than 190 countries annually. Other sizable holdings include Japan Tobacco ($42-million), Imperial Tobacco ($25-million),Carolina Group ($24-million), Korea Tobacco ($21-million), Reynolds American ($12-million) and Canada's largest tobacco company, Rothman's ($57-million). . . .

investing public money in tobacco stocks is a bit like second-hand smoke, it's both annoying and a serious health hazard that racks up billions in health care costs. Maybe it's time for the Canada Pension Plan to give up smoking.

Jump to full article »

Malaysia's JT International says to return cash 

Malaysian tobacco firm JT International Bhd has proposed to return 0.75 ringgit in cash to shareholders, the company said on Tuesday.

Jump to full article »

Vector Group: Any Smoke Left in Tobacco?  

Vector Group (VGR) is structured as a holding company, with two distinct businesses. The first, and by far the majority of revenue is the sale of discount cigarette brands such as Liggett Select, Grand Prix, Pyramid, Eve, and USA. Also, Vector has designed and marketed a nicotine free cigarette called Qwest. The second business is a residential real estate company, Douglas Elliman Realty LLC, which operates in the New York metropolitan area and is the biggest concern of it's type there. Vector Group owns a 50% stake in Douglas Elliman.

From the grades it's obvious that Vector Group is not a favorite of MagicDiligence. There are a few positives to note. . . .

Lastly, the company has a history of restructuring, side businesses, and a confusing set of financial statements. If you cannot understand a business, it's probably not a good investment for you.

With so many other quality companies on the Magic Formula screen, MagicDiligence recommends steering clear of Vector Group.

Jump to full article »