Philip Morris - Right or
Wrong?
Pro Philip
Morris
From Another Fool
News Writer
By Randy Befumo
The Motley Fool, TMF [email protected]
Should investors of principle own shares of PHILIP MORRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %>?
Many investors irrationally believe that not purchasing the shares accomplishes
something that is socially responsible, even if it may cost them a little
in return. Those who prioritize socially responsible investing over performance
often fail to see the moral imperative of the investor to seek the highest
return possible on capital. Investing is the project of attaining human freedom
by not having to sell your time -- your most precious possession. By creating
wealth over time with a minimum time investment, the intelligent investor
will reach a point where they no longer have to work, thus becoming free
to pursue whatever path they desire to become fully human. Those who sacrifice
return in an attempt to fulfill some misguided social agenda do so at the
expense of their own personal wealth, effectively condemning themselves to
having to sell more of their time in the future than someone who did not
make a similar choice. While they may not have shortened their lives, they
certainly have shortened the part that is useful to them.
In the end, the "evil" of Philip Morris is that it manufacturers a product
with some addictive properties that shortens the lifespan of those who use
it. Those who use tobacco do so in spite of more than 30 years of scientific
evidence that it will shorten your lifespan, much like those who drink to
excess, use drugs, engage in unsafe sex and eat a high-fat, low-fiber diet.
Setting aside for a moment that many investors have irrationally chosen to
avoid investing in only one of the products that is unhealthy, happily putting
their pennies in the companies that produce food products with absolutely
no redeeming nutritional value, the question becomes one of pragmatism. Is
more accomplished by avoiding the shares or by purchasing them if they are
undervalued relative to their intrinsic worth? Which option is more virtuous
-- human freedom or to avoid investing in a company that does something you
do not agree with, even if it is a compelling value?
The money put into a share of Philip Morris long ago stopped going to the
company. The corporation has been a net buyer of its own stock for nearly
a decade now. More of the dividend payout comes from the food and beverage
business than the tobacco business, given that the tobacco business is one
of the few areas where the company is actively reinvesting capital. All told,
avoiding the shares does nothing to detract from the company. Consumers who
buy the plethora of Philip Morris food products including Kraft, Oscar Meyer,
Jell-O, Post Cereals, Maxwell House, Philidelphia Cream Cheese, Minute Rice,
Stove Top Stuffing, Toblerone, Kool-Aid, Cheez Whiz, Country Time, Tombstone,
Shake N Bake, Tang, Miracle Whip, Capri Sun, Miller and Molson do more to
forward the corporate aims of Philip Morris than avoiding the stock could
ever hope to accomplish.
Minimum time lost, maximum life value gained. If Philip Morris is undervalued,
the individual stands to gain more by investing in it than they could possibly
achieve by not -- particularly if as a consumer they support its massive
food operations in any way, shape or form.
Randy Befumo
The Motley Fool
News Writer |