In short: The sin-stock example of flows setting multiples: mandates that bar tobacco "should lower the price of Altria relative to its competitors" and create conditions for "higher outperformance… for each unit of fundamental performance."
Altria (Marlboro in the US) is a "sin stock." Many funds are forbidden by their rules from owning tobacco, which means less demand for the shares and a lower price than the business alone would justify.
Green's point is that this demand gap, not the cigarettes, sets the valuation — and a lower starting price means more return for each unit of business performance. It illustrates his broader thesis that flows decide prices; he gives no buy or sell view on Altria.
5:10— A good example of that would be sin stocks like a Philip Morris or Altria today, right? Some people have investment mandates that prohibit them from owning tobacco stocks. All else equal, that should lower the price of Altria relative to its competitors, reduce the speculative aspect associated with it and create conditions under which higher outperformance can be achieved for each unit of fundamental performance.
In short: Ranked #3 — ~8% FCF yield, "around fair value"; strongest profitability of the six, robust credit, better on new products (on!) than he thought. But a US Marlboro story paying ~80% of FCF as dividends, and he avoids US stocks: no Hungary–US double-tax treaty since 2024.
Altria owns the right to sell Marlboro in the US and the on! nicotine pouch. It is the most profitable of the six measured against its physical assets, and its credit is very strong. But it is basically one US cigarette franchise, and it hands out about 80% of its free cash as dividends, leaving little for buybacks or growth. At about an 8% free-cash yield he sees it as roughly fair value.
He personally avoids US stocks: since 2024 Hungary, where he lives, has had no double-taxation treaty with the US, so US dividends get taxed twice. He still ranks Altria third on its merits.
13:59I really like both of these stories. Altria is a decent third. I'm not investing in US companies because of double tax treaty situation. Basically no double tax treaty in Hungary since 2024 with the US, so I'm avoiding that. But, I still put Altria on the third. And then you can think about it as valuation is reasonable, so it's cheap enough. It's around fair value.
In short: Profitability benchmark: with BTI and PM a "top dog" at 40–50% return on tangible assets; but "one of the criticism I have for Altria was that they have an 80% payout ratio."
11:54You can see historical payout ratios. The company will now cap it at 60%. So we are looking at oh here it is 40 60 and I really like this. So if I would have looked at the company a year or two ago I would be like oh they are paying out too much. So actually that's one of the criticism I have for Altria was that they have an 80% payout ratio.
In short: Marlboro owner; valuation benchmark: Pernod Ricard now trades below Altria's price/earnings multiple.
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Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.