The terms of Philip Morris International’s spinoff from Altria in 2008 made it a company with characteristics that are, to my knowledge, unmatched by any other large-cap stock. And it is that Philip Morris International is a company that sells essentially the same cigarette brands that Altria sells to investors in the United States, except 0% of Philip Morris International’s revenues are generated by selling cigarettes to American investors. It’s all overseas money, except Philip Morris International keeps its headquarters on Park Avenue in New York and reports all of its profits, volumes, and balance sheet considerations in numbers that are converted to U.S. dollars.
One of the Warren Buffett quotes that gets repeated time and time again is that it’s better to buy a wonderful company at a fair price than a fair company at a wonderful price. It’s a useful piece of wisdom, but often gets used by investors to justify whatever it is they want to buy at a moment (using the adage as mere lip service to valuation). Buying Hershey at $109, Brown-Forman at $90, Colgate-Palmolive at $69, or Realty Income at $52 is NOT an example of buying a wonderful company at a fair price. Those are examples of buying excellent companies at 15-25% premiums to what they are worth.