Currently, the tobacco industry is in decline because cigarette consumption decreases by around 3% annually. The main reason for that is a growing awareness of the harmful health effects of smoking cigarettes. As a result, total cigarette consumption has continued on a 13-year downward trend. That is why the market for e-cigarettes might be considered the next growth play for the cigarette producers as the chart below suggests.
The Best Electronic Cigarette InvestmentsCigarette stocks are among the best "sin" stocks and have dramatically outperformed the market the past 10 years.
Besides Altria, which is a favorite atMoney Morning and is included in theMoney Map Report portfolio, here are three other e-cigarette stocks investors should consider:
Reynolds American Inc. (NYSE: RAI):The second-largest tobacco company, Reynolds produces Camel, Doral and Winston products, accounting for 25% of U.S. tobacco sales. In 2006, it purchased Conwood, the second-biggest smokeless tobacco company in the United States, and had a limited launch of its e-cig Vuse last year. In 2013, Reynolds expects to sell Vuse nationwide and is getting ready to launch e-cigs with a heat source at the tip that heats rather than burns tobacco. (Reynolds introduced a similar e-cig, Eclipse, in 1996 and still sells it to wholesalers and retailers upon request.) Like Altria, RAI offers a healthy dividend just under 5% and is up 572% in the past 10 years.
Lorillard Inc. (NYSE: LO): The maker of Newport cigarettes, Lorillard is the third-biggest U.S. tobacco company and the oldest (founded in 1760). Newport accounted for 88% of Lorillard's sales in 2011, and to diversify in 2012, it acquired electronic-cigarette maker blu eCigs for $135 million. Blu eCigs had 2013 first-quarter sales of $57 million, up from $39 million only one quarter ago. LO offers a 5.1% dividend and has returned almost 605% the past 10 years.
Vapor Corp. (OTC: VPCO): Unlike the other companies, this is a direct play on e-cigs. In fact, Vapor Corp. is the only fully reporting, publicly traded electronic cigarette company in the U.S. But compared with the above stocks, it's definitely the riskiest of these investments. Vapor Corp. designs, markets and distributes e-cigs under the Fifty-One, Krave, VaporX, EZ Smoker, Green Puffer, Americig, Fumre Hookah Stix and Smoke Star brands and is a possible takeover target for big tobacco firms. For 2012, it reported record net sales of $21.4 million, an increase of 33.6% year-over-year. In early January, VPCO tripled from 25 cents to 75 cents and has since sold down to 40 cents.
Despite the growing number of people actively participating in the private placement and bank instrument business, there are very few that truly understand what a medium term note is. Though this amuses us to some degree, it also has alarmed us enough to take action. Since the “MTN” (medium term note) is a major reason the private placement business exists, we felt like it would be a good idea to connect the dots for our readers with less experience.
For those of you who understood bank instruments prior to this article, we hope this provides additional insight to educate you further. For the rest of our readers, this information will open the door to a new understanding of wealth, while providing facts to help remove uneducated PPP brokers from your network.
By definition, Medium Term Notes (MTN’s) are debt instruments which are created by banks and sold to investors, having a predefined face value, date of maturity, and annual interest rate.
For example, you may have a 10 year note issued from Barclays Bank worth 100M, collecting a coupon (interest) of 6.5% per year. Each year you would receive 6.5M until the date of its maturity, where you may cash it in for its full face value.
Though an MTN has similar characteristics to other debt notes, it is completely unique due to its flexibility, price, resale potential, and ability to be purchased at a discount from face. Now that you know what a medium term note is, let’s see why they have become so popular recently.
Over 50 years ago, when medium term notes (MTN) started to become available, there were very few passive investments which could compete with the benefits of owning a bank instrument. Given the high annual interest rate, possible discount from face value, and solid backing by top 25 banks, many flocked toward those who issued and owned the notes, looking for ways to financially capitalize. Once the idea of “trading bank instruments” caught on in the secondary market, the private placement business grew steadily, until the entire business changed with the introduction of the internet.
With the explosion of the internet, the secondary market has been flooded with tons of new brokers trying to broker buy/sells of medium term notes, and bank guarantees. Though it may be possible to close a bank instrument deal, it takes an act of god to do so. The real discussions about bank instruments, at least for those who are successful, revolve around private placement programs.
Bank instruments, such as medium term notes and bank guarantees, are the lifeblood to any private placement program. Since these notes can be purchased at a discount from top banks, traders can earn quite a hefty profit, all while being risk free due to a prior contractual obligation they had with an “exit buyer”.
As we all know, an “exit buyer” is the entity which purchases the MTN/BG at a slightly higher value, but still discounted from face. Once the first exit buyer purchases the note from the trader, the process repeats itself several times until a final buyer purchases it to hold until maturity. By that time, the note has a very small discount (ex. 93% of face), but many conservative buyers are happy with the remaining spread and annual interest.
Though we could go on forever on the different topics related to medium term notes, if you understand this article, you will have far more knowledge than most you will speak to. If you would like more information on bank instruments, and their role in private placement programs, please read our extensive article by clicking on this link: “Understanding Bank Instruments, from Bank to End Investor”.
There are many out there who deny the existence of PPP’s and trading platforms and bullets because the returns are crazily high and they have failed to get their asset to trade.
The reality is, that there are very few real trading platforms on the planet with the necessary approvals. In other words look at 99 fakes to one real as a reasonable arbiter.
Furthermore trading platforms are only interested in cash. With starting levels of $100M US it is no wonder that finding clients for such platforms is difficult.
Monetizing assets such as metals or precious stones or art is virtually impossible however much faith your broker instills in you about insurance wraps being traded every day by PPP’s and all those upfront fees for due diligence being really worth it!
So, if you have the cash – cash and not some instrument or CD – then you have a chance to trade. But even then you need to be accepted by a trader and pass some seriously heavy duty due diligence. So, if your cash is from some heritage asset out East or you’re laundering for the Russian mafia or some drug lord you’ll get busted and no trade will ever happen. So best stop dreaming now.
If you would like more information on this subject, feel free to contact our investor relations division. You will need to provide us with the reason for your inquiry and also request a password to be sent to you in order to access any additional resources in regards to this topic. CONTACT US
So, in conclusion, PPP’s are real. There are 99 fakes to every real opportunity. Take care out there.
Tags: Are PPPs real?, insurance wraps, platform, PPP, trading cash, Trading MTN's, trading program, trading programme