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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (15576)	10/6/2002 3:21:14 PM
From: Marc Fortier	Read Replies (2) \| Respond to of 79126

Paul, regarding RJR, what do you think of the following article: quote.bloomberg.com I was particularly surprised to read that the dividend might be in jeopardy if the price pressures remained too long. I don't know how RJR with its sound balance sheet could come to that. Here is an excerpt: "Cut a couple of hundred million in dollars from net income this year and they'll have a tough time paying a dividend,'' Peris said. R.J. Reynolds increased its quarterly dividend by 8.6 percent in June to 95 cents a share." Like you, I took a position lately, largely because of the dividend. I was also feeling quite sure of my investment, because of the book value and the cash at hand. Now, I am very skeptical about was said in this article, but I can't help but fear that the stock will trend down if such talks become widely spread.

To: Paul Senior who wrote (15576)	10/6/2002 10:59:44 PM
From: 249443	Respond to of 79126

Tobacco/Value/Margin of Safety Paul -- I agree that these stocks offer some attractive prices and dividend payouts. I think the payouts are very safe -- it is a significant factor for why many investors own these cash-cow-tobacco firms. My own strategy has always been to purchase puts with covered call proceeds and collect the dividend and any capital appreciation. I don't think tobacco firms offer any margin-of-safety based upon the constant litigation factors -- unless protective puts are purchased simultaneously with the common. Thoughts on the next 12-months: I think that big MO, et al, will be in the next 12-months offered at even more attractive prices (a la 3-years ago when big MO dropped below $20). Although a $28 billion verdict will obviously be reversed, there are too many new lawsuits being debated and lost by big tobacco. Then it will be time to pounce -- or at least in my mind. :) Jury Awards $28 Billion To Smoker in Tobacco Case A WALL STREET JOURNAL ONLINE NEWS ROUNDUP LOS ANGELES -- "...After deliberating for just under two days, a Los Angeles jury awarded $28 billion in punitive damages to a 64-year old woman dying of cancer in a lawsuit brought against tobacco giant Philip Morris Cos. The Superior Court jury awarded the amount to Betty Bullock, 64, of Newport Beach, who started smoking when she was 17 and was diagnosed last year with lung cancer that has since spread to her liver. It's the biggest individual award in a smoker's case brought against the tobacco industry..."