2024-02-11 09:10:00 ET
Summary
- We initiated a new long position in British American Tobacco.
- BTI trades at a mere 6x earnings, and is one of the cheapest stocks we own.
- We assume BTI would lose the equivalent of about 40% of US menthol sales if the product is banned.
- But even in that scenario, the stock is too cheap, and we plan to buy more if the stock drops materially on final news of the ban.
The following segment was excerpted from this fund letter.
British American Tobacco ( BTI )
We initiated a new long position in British American Tobacco ('BAT'). While BAT is in the consumer staples industry like some of our shorts, the valuation is vastly different. After falling 25% this year, BAT trades at a mere 6x earnings, and is one of the cheapest stocks we own. This appears to be a case of social conformity bias, as ESG-blinded investors are ignoring the company's brands, valuation, and strength in next-generation products....
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Bireme Capital - British American Tobacco: At Mere 6x Earnings, One Of The Cheapest Stocks We Own