According to the findings of research commissioned by the European Union that was publicized by health charity Ash (Action on Smoking and Health) through a Financial Times article, an extensive European system that tracks illicit cigarettes should be operated by tobacco manufacturers and independent third parties.
The system is designed to block illegal activities involving cigarette counterfeiting and smuggling. It should start by May of 2019.
The European Commission says illegal activities of cigarette counterfeiting and smuggling costs the tobacco industry approximately 10 billion euros ($10.4 billion) every year in terms of missing revenue.
The tobacco manufacturers wish to run the system themselves because it will cost them a significant percentage of their profits if they run it with third parties.
The most important tobacco producers who may be most affected by the proposed system are Reynolds American Inc. (RAI, Financial), Altria Group Inc. (MO, Financial), Vector Group Ltd. (VGR, Financial), British American Tobacco PLC (BTI, Financial), Lorillard LLC and Philip Morris International Inc. (PM, Financial).
During the third quarter, gurus made the following trades in tobacco companies:
Joel Greenblatt (Trades, Portfolio) increased his position in Reynolds American Inc. by 496.50% while Barrow, Hanley, Mewhinney & Strauss and Ken Fisher (Trades, Portfolio) reduced their holdings by 17.56% and 1.66%.
Greenblatt increased his position in Altria Group Inc. by 123.71% while Barrow, Hanley, Mewhinney & Strauss, David Dreman (Trades, Portfolio) and Fisher reduced their positions by 2.41%, 4.30% and 4.03%. Ruane Cunniff (Trades, Portfolio) sold out.
Greenblatt increased his holding of Vector Group Ltd. by 66.32% while NWQ Managers (Trades, Portfolio) reduced its position by 3.32%.
Fisher increased his holding of British American Tobacco PLC by 55.62% while John Rogers (Trades, Portfolio) and Greenblatt decreased their positions by 25.94% and 3.78%.
In Philip Morris International Inc., Rogers and NWQ Managers increased their positions by 29.93% and 8.11% while Tweedy Browne (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Fisher and Charles Brandes (Trades, Portfolio) decreased their positions by 5.79%, 3.30%, 0.12% and 5.61%. George Soros (Trades, Portfolio) opened a position in Philip Morris, buying 11,305 shares. Cunniff sold out.
Disclosure: I have no positions in any stock mentioned in this article.
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