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Altria Group, Inc.
MO LITE

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By cocomurph1
December 16, 2004

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Hi All!

I was reviewing results over the course of the year and reflecting upon my stealth return stock...(NYSE: RPM)...and in some ways how it acts like (NYSE: MO).

On the Altria (MO) board they often talk about the litigation risk and it's periodic effects upon the stock...and then the slow climb back up...all the time collecting a pretty decent dividend while realizing decent capital gains.

In a related vein on the BMW board, MO was reviewed as an historical example of the BMW reversion to the mean philosophy, wherein there was much money made by riding these long term waves of boom and bust...usually precipitated by tobacco's legal woes (or perceived woes.)

Well, back in August of 2003, Mathew Emmert had a post about dividend stocks ( this was pre-Income Investor ), where RPM was mentioned, and it's asbestos lawsuit related risk was noted.

The sad part for RPM is that this liability came via acquisition. Nevertheless, they appear to have a firm handle on the situation as it currently exists (and may even get to greener pastures if favorable asbestos legislation is re-introduced/passed by Congress.)

What kind of snuck up on me was how well this stock has performed over the last 16 months. From an initial position taken in August, 2003, I have added over time (as late as May, 2004) to a point five times the initial position. So the oldest part is 16 months...the youngest, 7 months.

The neat part is that by taking advantage of the periodic legal liability driven dips (just like MO) all of this stock was purchased within a $.08 range in the mid-$13.00 area.

Over the course of this quiet investment's life in my portfolio it has produced an annualized return of more than 50% for me, PLUS an annualized dividend of about 4.5%!

So, even while the stock sits still during its retreats/lulls, it was better than a money market.

When it hit me that this was a much better return than my " high risk " small/micro caps...well, I was surprised.

For those of you who "speak gebinr BMW charts", its current CAGR...even after the most recent run up....is about halfway between it's LO CAGR and it's mid-LO CAGR, by my estimation.

That says to me that it has more room to run before it is in BMW sell territory.

So wait for the next negative asbestos litigation media story...watch for the RPM stock price dip...and get yourself a piece of MO-LITE...it pays (and IMHO, has less litigation risk than BIG MO!)

Best regards,

Murph

(who realizes this is a sample of one...as well as hindsight...but the similarities are striking after monitoring both stocks...and who feels the cross-rough of Income Investor and BMW philosophies is not a bad place to be )


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