The already inexpensive British American Tobacco (BTI) just got more inexpensive following Wednesday’s announced $31.5 billion write down (mainly related to its U.S. cigarette brands). The shares fell sharply on the news (because it adds to the multiple big risks the company already faces). However, this big non-cash impairment doesn’t impact the company’s cash position and it won’t impact future capital allocation decisions (including the monster big dividend, currently yielding nearly 10%). In this report, we review the business, the details of the impairment charge, the company’s valuation and the big risks. We conclude with our strong opinion on investing.
Bond CEFs: Prices, Premiums and Interest Rates
A quick note to share some updated data and commentary on a handful of popular big-yield bond CEFs from PIMCO and BlackRock. This note may be of particular interest to those following our High Income NOW portfolio. For starters, here is a look at the latest movement in premiums and discounts (versus NAV).