BAT (BTI) attractive short

[KVS]

British American Tobacco (BTI) is the greatest short I have seen for a long time, if the rand weakness is temporary. If the rand-pound falls from R12.7 back to R11, the share price could fall from R350 to R300. (2) The company is buying back stocks, which creates more buyers than usual. According to my amateur calculations, if they used all the cash to buy back stocks, it would only boost EPS by 3.3%. (3) Governments want people to stop smoking. If the medical images on packaging does help, then there are bound to be more measures.

[#2]

dont know if you can short BTI, I know Standard Bank closed the CFD. Maybe someone else knows of another way?

[SimonPB]

ah yes the much maligned 'hope' strategy .. AKA standing in front of an out of control train and hoping it suddenly gets stopped by a gust of wind ..

[grommet]

lol

[#5]

Also known as the anti smoking movement. The way I see it, it is a win win for me. If the anti smokers get their way, I will be happy not to have to breathe secondary smoke again in my lifetime. If not, well I make some money then.

[seded]

Has run hard since mid March on very low volumes from time to time.Buy back is on going and certainly helps on demand creation side.A so called defensive stock now and not for shorting with buy back in place.

[BoburUncle]

Can't you short the SSF?

[#8]

why is everyone so cautious about share buybacks? BHP also had a share buyback - and look where they are?

[THRESHOLD]

The implication is that the entity concerned cannot use the money to finance growth - either through internal investment or acquisition. So they buy back their own shares instead of giving dividends. In the case of BTI - this is all well-known; it is a value stock (but with growth from the far east that won't prove to be nearly as capital intensive as most other industrials (since makiing cigarettes is a pretty low tech business. Sometimes buybacks are in vogue and sometimes they are anathema - its a fashion thing ruled by the latest text books prescribed for the CFA's.

[THRESHOLD]

Have to say though - that with well over 2 billion shares in issue - one has to wonder what difference the share buyback will make.

[seded]

Have a look at their sens history. They surely mop up most shares left by the Institutional "defensive" buyers at this rate. Omo.

[THRESHOLD]

So...? It makes practically no difference to the ratios - give it back to shareholders as a dividend.

[THRESHOLD]

Who knows - I might even decide to reinvest the dividends in BTI shares - but it will be my choice.

[kwagga]

This possibly the worst stock to try and short. It's the most defensive stock on our share market and have huge backing from institutional buyers. There is better stock to short the BTI - much better.