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  • axpkocop axpkocop • Jul 17, 2009 12:00 PM Flag

    Is MO Now Better Investment than PM?

    I own them both as well as RAI and a small position in LO.

    I've been aggressively selling put options against MO and PM because I'd like to double my stakes on any 10% drop in their stock price.

    MO has UST and a 27% interest in SABMiller which is their jewel that they may someday spin off. Their debt level is a little high however and they've suspended their share repurchase program due to their acquisition of UST. If you wait for them to pay down their debt and build up equity you may miss a golden opportunity to buy shares now when MO shares are being sold at a deep discount to their intrinsic value.

    I'll continue to add to both my MO and PM shares as cash comes available.

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    • rgbtimesrgb rgbtimesrgb • Jul 29, 2009 10:10 AM Flag

      MO has the litigation threat, and no dollar hedge.

    • axpkocop axpkocop • Jul 29, 2009 9:21 AM Flag

      LO?

      They had a great earnings report yet the stock didn't move.

      I've sold more puts against LO in the last few days and I may sell more if the stock should drop.

    • dar200 dar200 • Jul 23, 2009 12:31 PM Flag

      <<<MO has UST and a 27% interest in SABMiller which is their jewel that they may someday spin off. >>>

      There will be no spin off because a 27% interest doesn't qualify for a tax free (actually tax deferred) spinoff. A distribution of SAB stock by MO to its shareholders is first taxable to MO (deemed to sell at FMV) and then the FMV of the SAB stock is taxable to the MO shareholders as a dividend.

      MO's tax basis in SAB is next to zero (see deferred tax disclosure in 10-K), so it ain't gonna happen.

    • tr2000man2000 tr2000man2000 • Jul 21, 2009 8:13 AM Flag

      i am with you and own both MO & PM. MO is cheaper right now and will maintain higher dividend, obviously PM is a growth stock with decent dividend, why not hold both. For now due to valuation I will continue to hold majority in MO and will be averaging into PM with the MO dividends, best of both worlds. peace

    • deviti2517 deviti2517 • Jul 17, 2009 1:38 PM Flag

      No - PM is better than MO. PM sells tobacco in markets where cigarettes are not as "taboo" as they are in the US. That long term sentiment the US has formed towards cigarettes will hurt MO's long term volume of sales.

      I work in an office and it almost seems that if someone in my group smokes, they are looked down on. Shouldn't be so, but this is the way american mentality is getting toward cigarettes.

      • 1 Reply to deviti2517
      • axpkocop axpkocop • Jul 20, 2009 11:02 PM Flag

        I bought both MO and PM today with them both being down at the time.

        MO is primarily a tobacco company but it also owns 27% of SABMiller Brewing. They're very big in China. I also own some Tsingtao beer. Unit beer sales growth in China is growing at or near double digit rates.

        MO also owns UST the number 1 chewing tobacco company in the USA. At MO's current price of under 18 I'm a buyer.

 
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