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Hold Or Sell UST?
Old 09-06-2008, 09:07 PM   #1
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Hold Or Sell UST?

For some years I accumulated some shares of UST is a DRIP. Now converted to my Wells Trade account. This stock jumped something like 25% on Friday as there are buyout discussions with Altria (MO). This has been a decent, dividend paying stock for me but this is quite a price jump. I can sell now and, I assume, capture some gains or I can hold and if there is a buyout at this level I would get an appropriate number of MO shares which also pays pretty good dividends. As a company I liked UST more than MO but I don't know where to go from here. I have generally been able to figure out some good stocks to buy but I hae no real plan for selling stocks, the idea being to collect dividends and sell some stocks as other needs arise in my life.
Any ideas on how to evaluate this situation?
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Old 09-06-2008, 09:27 PM   #2
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For some years I accumulated some shares of UST is a DRIP. Now converted to my Wells Trade account. This stock jumped something like 25% on Friday as there are buyout discussions with Altria (MO). This has been a decent, dividend paying stock for me but this is quite a price jump. I can sell now and, I assume, capture some gains or I can hold and if there is a buyout at this level I would get an appropriate number of MO shares which also pays pretty good dividends. As a company I liked UST more than MO but I don't know where to go from here. I have generally been able to figure out some good stocks to buy but I hae no real plan for selling stocks, the idea being to collect dividends and sell some stocks as other needs arise in my life.
Any ideas on how to evaluate this situation?
At one time UST was by far my largest position. Tobacco was 40% of my equity allocation. I still have a good slug of UST. I would have sold on Friday, but I already have >$100,000 realized capital gains this year and this would have added a lot more since this is a very low basis holding.

But from what I have read, it is at least as likely to be a cash deal as stock. I held, only because I would rather put off the gain at least until next year. But that may have been not too smart. If the deal falls through, it is probably back to $50 and maybe lower since I have thought that there is some takeover premium built into the price. And if they pay cash, it is likely to be before yearend anyway.

On the positive side is that UST stayed high and in fact got higher all day Friday, and even crept up in after hours trading. Arbs aren't dumb, so to me that says this is very likely to go, and go at a good price price.

UST has been a wonderful investment for me- while the much of the rest of the world was getting creamed in the dot-bomb fiasco, I was getting well with UST wich had been knocked down with a lawsuit and judgment over their marketing practices, as well as the general bad karma of tobacco at the millenium. I also bought MO about the same time.

IMO Altria is a much better management than UST, but I haven't paid much attention to it recently. (Post spin-off of Kraft and PM International)

Clearly the market feels that Altria will do a better job with the UST assets than UST has been doing lately, and both companies increased in price after the rumor came out.

Let's hope it doesn't fall through, and that those of us who would prefer stock can get that.

Ha
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Old 09-07-2008, 08:17 AM   #3
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Would have sold. I sold mine in the low $50s a while back. Not surprised MO went after them after their own snuff start-up bombed out and wanted some diversification. Think MO is really paying a lot.

Although MO could probaly make UST a leaner/meaner operations, I still think UST has challenges. UST is struggling against Conwood - owned by RAI.

I think due to the wide spread in price between UST/Conwood products, Conwood has much better pricing power. I don't think UST could be as aggressive in raising prices with the market share losses they have experienced + I think consumers question UST product prices when they can get a good can of snuff for close to $3 less (Grizzly).

Maybe that's why UST is playing around in the wine biz.
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Old 09-08-2008, 11:18 AM   #4
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I guess you guys saw the news an hour or so ago- Altria buys UST for $69.50/share, all cash.

I think I may get the money, and just look for a re-invesment of at least part of it into MO.

Ha
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Old 09-08-2008, 11:22 AM   #5
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Sold@$68.15 and it is till going up, before the MO announcement. I am satisfied, I captured some gains and this and another stock sale will be what we add to our pensions for next years expenses.

My original plan was to withdraw from our target retirement fund but as UST has gone up it seemed like a good time to sell. Another stock I liked, KEY, has gone down for tax loss harvest, this will be a first time for me, lots to learn about stock management. All I did for several years was put small amounts of money in a few DRIPs but now I am no longer accumulating and need to actually pay attention.
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Old 09-08-2008, 11:30 AM   #6
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It did my soul good to invest in something that so many right thinking people condemn. Dirty yucky nasty working class men spitting that nasty juice all around, what is a lah-di-dah swell to think?

Over the years tobacco, booze and casinos have been good to me. Though they do have their swoons.

Once UST is gone I will be down to only Diageo in the sin category, so I had best be looking for a replacement

Ha
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Old 09-08-2008, 11:34 AM   #7
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I guess you guys saw the news an hour or so ago- Altria buys UST for $69.50/share, all cash.

I think I may get the money, and just look for a re-invesment of at least part of it into MO.

Ha
I own MO as well. I still own a bit of PM after the split. I wonder if I should sell PM and roll into MO. Better div for sure.
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Old 09-08-2008, 12:55 PM   #8
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I own MO as well. I still own a bit of PM after the split. I wonder if I should sell PM and roll into MO. Better div for sure.
PM is likely to have better growth. Now that I am going out of UST, I will look at the whole tobacco space. I have lot of respect for Michael Szymanczyk, the MO CEO. Who is PM CEO?

Ha
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Old 09-08-2008, 01:12 PM   #9
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PM is likely to have better growth. Now that I am going out of UST, I will look at the whole tobacco space. I have lot of respect for Michael Szymanczyk, the MO CEO. Who is PM CEO?

Ha
Mr. Louis C. Camilleri BA, 53
Exec. Chairman and Chief Exec. Officer

Mr. Hermann Waldemer ,
Chief Financial Officer

Mr. Andr� Calantzopoulos , 51
Chief Operating Officer

Mr. Miroslaw Zielinski ,
Pres of the Latin America and Canada Region

Mr. Matteo Pellegrini , 45
Pres of the Asia Pacific Region
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Old 09-08-2008, 01:28 PM   #10
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Mr. Louis C. Camilleri BA, 53
Exec. Chairman and Chief Exec. Officer

Mr. Hermann Waldemer ,
Chief Financial Officer

Mr. Andr� Calantzopoulos , 51
Chief Operating Officer

Mr. Miroslaw Zielinski ,
Pres of the Latin America and Canada Region

Mr. Matteo Pellegrini , 45
Pres of the Asia Pacific Region
Thanks Dawg. As I remember, Louis Camilleri was the CEO at MO prior to the spin-off. Altria didn't make many mistakes that I could perceive. I think if it were me, all things being equal I might prefer PM with it's likely gowth and relative insulation from crazy legislation, to MO.

Ha
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Old 09-08-2008, 06:37 PM   #11
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I imagine LO will be the next one to go at some point. Too small to be a stand alone with domestic demand dropping + litigation. They claim their products are declining at a slower rate. Stupidly profitable.
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