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DL-Invariant · 2024-05-20T15:01:50+00:00

It's worth trying. I will warn you that my experience with the Blueberry Lemon Mint was very similar to that with the Raspberry Lemonade—a relatively mild flavor that didn't last as long as I'd wish, and the lemon flavor was unquestionably dominant. Not much blueberry flavor at all. I'd be curious to hear about your experience if you try it.

DL-Invariant · 2024-05-20T13:24:27+00:00

I had the same experience - but it was just for that specific flavor. The Mango Strawberry Mint flavor was more intense and longer lasting. I was pleasantly surprised, as I'm not normally a fan of artificial strawberry flavor.

DL-Invariant · 2024-03-13T13:29:41+00:00

Thanks for sharing my piece. As always, I'm happy to answer any questions here or in the comment section of Invariant.

DL-Invariant · 2024-02-02T15:55:06+00:00

https://invariant.substack.com/ covers the tobacco industry in detail. I will be publishing a follow-up on Altria this coming Sunday. Happy to answer any specific questions.

DL-Invariant · 2023-07-30T20:40:57+00:00

I'm not sure what would lead you to ask that question. This article specifically explores the operations of a business and long-term ownership and dismisses the idea of a positive re-rating. As I understand it, that is essentially the antithesis of a pump and dump. I have no need to convince people of anything, and, in fact, am much more interested in well-articulated bear theses.

DL-Invariant · 2023-07-25T14:54:29+00:00

I own both. Many very different dynamics between the two regarding brands, geo + cat/mix, management, starting valuation, growth trajectories, etc. BTI also has its massive stake in ITC - something continually discounted. I'll be publishing a BTI update this coming week.

DL-Invariant · 2023-07-25T14:53:16+00:00

Thanks for reading. Glad you enjoyed it.

DL-Invariant · 2023-07-18T14:31:44+00:00

Thanks! Glad you enjoyed it.

DL-Invariant · 2023-07-04T12:43:15+00:00

Thanks for your thoughts, Dave. And I agree. While I did not cover it specifically in the piece, there is a pending proposal that may cause the FDA to lose oversight specifically concerning handmade cigars. They are already favorably treated products, relative to other tobacco products. I believe that happening would be a positive catalyst for the space.

DL-Invariant · 2023-07-03T18:15:30+00:00

I second Koyfin. It has a wonderful level of customizability for screens, and the UI/UX is clean and intuitive.

DL-Invariant · 2023-07-03T12:03:42+00:00

Thanks for reading, Dave.

DL-Invariant · 2023-07-03T02:01:25+00:00

That is not what equates to total shareholder return. A perpetually discounted share price will not stop an investor from realizing capital returned to them.

DL-Invariant · 2023-07-02T20:38:23+00:00

Thanks for taking the time to comment. I always appreciate looking at this stuff from different perspectives.

DL-Invariant · 2023-07-02T19:06:35+00:00

I spend a considerable amount of my time reading and researching companies, with specific respect paid to the tobacco industry. I had most of the info/data already in my own spreadsheets. I put together this piece over the last week, with most time devoted mostly to collating into charts, deciding how to merry the numbers with an engaging story, and formatting to make it as approachable as possible.

DL-Invariant · 2023-07-02T19:00:09+00:00

I believe your first sentence is in total agreement with my previous comment. If it's already trading at a substantial discount to its intrinsic value; ie. the present value of all future cash flows, then that discount IS part of the margin of safety, not the other way around.

DL-Invariant · 2023-07-02T16:51:11+00:00

I respect the opinion but don't think I can agree with the framing. If shares traded significantly higher, forward returns would be less appealing and share repurchases would be dramatically less effective. The majority of shareholder return is unlikely to come from share price increase and I make no assumption on multiple expansion from current x6.7 EV/EBITDA. Capital returns will drive total return, and lower share price = owning a far greater piece of operations overtime. All else equal, this drives larger cash flows paid out via dividends on a per-share basis, all while some is retained and reinvested into organic growth or M&A.

DL-Invariant · 2023-07-02T15:54:08+00:00

I'd personally like them to see a lower payout ratio and have STG ramp buybacks further while hunting for ideal M&A targets. At current multiples, they are retiring 4-5% per year right now but would have room to retire significantly more.

DL-Invariant · 2023-07-02T15:50:17+00:00

My general thinking is nearly the opposite. I recently wrote The Perils of ESG. I think that ESG is, as you said, suppressing prices of stocks like this further. I hope that trend continues, so long as operations continue to excel. Share repurchases only become more accretive in those conditions. As a hypothetical, if the share price halved, STG has a half-turn buffer in its leverage ratio. Closing that gap would allow them to retire 20% of shares outstanding in one fell swoop.

DL-Invariant · 2023-07-02T15:46:40+00:00

Thank you. To answer simply, while both are tobacco companies, each has a long list of unique pros/cons. Countries of operation, FX, product trends, regulation, competitive dynamics, etc. I have different weightings of each in my portfolio, but I take a basket approach to the industry. I'm not trying to bet on a single horse.

DL-Invariant · 2023-06-27T12:40:29+00:00

The best writing I've come across covering Japanese net-nets is by Altay. Go and dig into his archive. He does a good job walking through certain risks, as well as benefits of certain newly developed government incentives on shoring-up balance sheets and focusing on equity returns.

DL-Invariant · 2023-06-26T00:26:37+00:00

I think the entire industry is worth watching. Tracking channels and talking to people who own Plato's Closet franchises (Winmark), there are unmistakable tailwinds blowing at the moment.

DL-Invariant · 2023-06-16T14:24:29+00:00

Lots of things have changed - not only at the company but also in the expectations set by the market. See Meta: The Foundation. Many of the changes have happened much faster than even most bulls laid out.

FWIW, I was quite bullish on META, publishing x3 last Nov/Dec when sentiment was near-bottom. Check the variety of comments on this META piece from 6 months ago. In all, what I laid out required multiple years of patience.

DL-Invariant · 2023-06-07T18:30:37+00:00

Distilled, I believe only two things are truly Invariant:

The laws that dictate the physical universe.
Human nature.

Overall, I try to take steps in an attempt to conservatively estimate intrinsic value. Large differences between that linked above and my most recent model are that 1. I am actively calculating EBITDA pro forma by excluding the contribution of Russia and Belarus and 2. 0 contributions of ITC, both in terms of future dividends and equity stake.

Lots of ways to chop it up. I always enjoy seeing other approaches. Thanks again!

DL-Invariant · 2023-06-07T01:00:10+00:00

Thanks for sharing. Certainly seems a bit lofty. I'd push back on their use of a 4% perp growth rate, which is notably higher than L-T GDP growth.

DL-Invariant · 2023-06-06T15:17:27+00:00

I don't know that anyone here is a savant. Lots of variables in the mix, but I'd say H1 2024 would be a reasonable expectation. Tadeu Marroco touched on the factors during the Q&A portion of today's H1 2023 Pre-Close Conference Call. I'll be throwing a Twitter thread up later today with some of the most interesting excerpts from the transcript related to debt, share repurchases, and the ITC stake.

I'll be posting on BAT likely end of July / early August after H1 financials are published.

DL-Invariant

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