Tobacco.org

Altria Group: Falling Smokeless Products Volumes a Worry  

• ALEC attacks shareholders  

Should shareholders have a say in how much money corporations give to candidates, super PACs and dark money groups? The American Legislative Exchange Committee, or ALEC, doesn’t think so.

ALEC is best known for giving moneyed special interests a hand in crafting “model legislation,” including the NRA-backed “stand your ground” laws that have touched off a furor in the wake of the Trayvon Martin shooting. But a trove of internal documents obtained by the advocacy group Common Cause shows that the group’s activities are far more varied than was previously known; it does everything from issuing boilerplate press releases to flagging how lawmakers should vote on given pieces of legislation.

It also lobbies actively to scuttle shareholders’ rights – specifically to limit their ability to weigh in on political giving. Last year, for instance, New York state lawmakers introduced a pair of bills requiring corporations to get shareholder approval before making donations to politicians or outside groups, such as super PACs. Backers argue the measure would provide crucial safeguards for investors. “Giving shareholders a voice ensures that their money isn’t used for political purposes they don’t agree with or that are detrimental to the corporation,” explains Adam Skaggs, a senior counsel with the Brennan Center for Justice at New York University law school.

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Brokers' round-up, downgrades for two major tobacco companies  

Equity Research on Lorillard Inc. and Reynolds American Inc. - Cigarette Makers Gathering Momentum 

LETTER: What Google can learn from tobacco companies  

From an investor perspective, the thing about tobacco companies is that investors know the really bad news. This limits the scope for “known unknowns”.

The predictability of tobacco companies is well understood – they use their pricing power (despite, or in some cases because of, rising tobacco taxes) to deliver rising dividends and they target income-seeking investors. Tobacco companies have a clear sense of shareholders as stakeholders and reasonable shareholder governance. Since its spin-off from Altria a little over four years ago, PMI has raised its quarterly dividend by 67 per cent.

Contrast this with the known unknowns of, say Google which, like any technology company, faces a significant risk of disruption.

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• From Tootsie Rolls to tobacco: What's in your CPP fund  

Tootsie Roll Industries, Tim Hortons Inc. and H.J. Heinz Company are just a few of the hundreds of companies Canadians have a stake in as part of their Canada Pension Plan fund.

The fund, managed by the Toronto-based CPP Investment Board (CPPIB), was set up in 1997 by the federal government and provinces to invest the contributions not needed to pay for current benefits to the CPP. . . .

The fund has also been criticized for some of its holdings, which include oil companies like Haliburton, tobacco companies like Imperial Tobacco and Philip Morris and munitions manufacturers like Lockheed Martin and BAE Systems.

But the fund has a strict "investment only" mandate and, by law, cannot take political or moral considerations into account when choosing investments.

"We have essentially said we will invest in anything that would be legal or a business that would be legal if carried on in Canada," Raymond said.

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Philip Morris: healthy earnings 

But perhaps tobacco companies should not be priced to reflect an inevitable decline. PMI’s latest earnings report, published on Thursday, looked healthy. Earnings rose nicely and the organic volume growth was the best in years. And while smokers from Turkey to Indonesia are likely to kick the habit over time, this fact may not differentiate tobacco companies. After all, how confidently can we project what people will be eating and drinking in 20 years – to say nothing of what technologies they will be using or which resource companies will have had their best reserves nationalised?

We happen to know what will, at some point, stifle the tobacco companies. That we do not know this about other companies does not mean they will live forever.

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Philip Morris International Earnings Preview: Asia to Drive Top-Line Growth 

• Tobacco industry's legal challenge stumbles as death tops agenda 

THE tobacco industry's constitutional challenge to enforced plain packaging has hit a central problem: smoking kills.

After six hours of legal argument by the tobacco multinationals in the High Court yesterday, the Chief Justice, Robert French, raised the question of whether previous cases cited by legal counsel to support the companies' case dealt with a product comparable to cigarettes.

Justice French put it to leading counsel Bret Walker, SC, who had referred to cases dating back to the 1870s in the United States, that none related to a product on the market that carried the risk of serious or fatal disease to all who used it.

''Doesn't this put it into a different category,'' Justice French asked.

Mr Walker said there was no case dealing with public health in the context of this constitutional challenge that he could produce.

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Cigarette makers fade on fears of plain packaging  

Altria Just Hit a 52-Week High: Can It Head Higher? (MO) 

• Sottera gets $20 million to invest in electronic cigarettes  

Scottsdale-based Sottera Inc., dba NJOY, received a $20 million investment from Greenwich, Conn.-based Catterton Partners, a consumer focused private equity firm.

The money will be used to market NJOY’s electronic cigarette product.

Plans call for hiring a handful of sales and marketing employees to help increase brand awareness of the NJOY product line. The company finished 2011 with 12 employees and now has 16.

“We certainly plan on hiring more,” said Craig Weiss, president and CEO of NJOY.

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Playing Defense With Big-Cap Tobacco  

LIC made no investment in cigarette, gukta cos since April 11  

India's largest insurer LIC has not made any investment in cigarette and gutka manufacturing companies since April 2011, government today said.

"The Life Insurance Corporation of India (LIC) has informed that they have not made any investment in cigarette and gutka companies since April 1, 2011," the Minister of State for Finance Namo Narain Meena told Lok Sabha in a written reply.

He said that all the investments by LIC were made as per the norms laid down under the regulations of Insurance Regulations and Development Authority (Investment) Regulations, 2000.

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A stellar stock? Beware the smoke trail 

But one bothers me. It is Imperial Tobacco.

Tobacco companies have had an extraordinary amount of bad publicity over the past 50-odd years. They’ve been in and out of court; they’ve paid out enormous settlements; the countries in which they operate have spent billions trying to prevent citizens from buying their products; and they’ve been severely limited in terms of how they can market, advertise and manage their brands.

Yet their shares have continued to be top performers. Look at how their businesses operate and you can glimpse the reason why. . . .

But look beyond today’s dividends and you have to wonder if the next 20 years will offer the consistency of the past 20. . . .

Given the known health nightmares that come with smoking, it just isn’t reasonable to think that emerging market governments will continue to allow their populations to take up smoking with the unchecked enthusiasm of the past. Our governments let us do it, but that was long before the relevant health information was in the public domain. Why would the Chinese, Russians, Brazilians et al make the same mistake when it is very clearly in the public domain?

Surely they will put the same restrictions on branding . . .

I’d be happy to tuck quite a few of Lapthorne’s stocks away for 5 to 10 years. But Imperial? No. The nation’s fund managers might think of tobacco as a long-term income-generating industry. I think of it as one in terminal decline. And a nasty one at that.

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