In the red with Imperial Brands!

[Bouleversee]

How about this for a non-sequitur: a small item in The Times today says that IMB dropped 49p to £23.25 after RBC Capital Markets cut its price target for the tobacco group's shares from £32 to £28. Elsewhere I read that Robt. Stephens of Investomania considers IMB has investment potential and with a yield of around 7% seems undervalued and has significant upside potential. "The reduced risk products space continues to offer significant growth in the long run, according to my research" he says. They were up 1.66% when I first looked this morning but slipping back again now. Having added at around £32 a while back, I think I'll stick personally but others may be more courageous. You pays your penny .....

[Dod101]

After that rather lofty statement from me yesterday I must say I think that Imperial is one of those shares that it is fashionable to knock and fund managers tend to follow each other. I think that accounts for some of what is surely an oversold position at the moment.

Dod

[vrdiver]

For me, this is a management play: OK, not SI, but tobacco has been under the cosh for decades (threats of cancer lawsuits etc.) yet has not only survived but produced market outcomes better than most people could have dreamed of!

Now, the market is evolving: traditional tobacco is being replaced by other products, The large tobaccos, like the large pharma or software companies can afford to watch that space and buy out anything that looks promising.

Larry Ellison (of Oracle, ORCL) said "it's cheaper to write cheques than to write software" and I guess the same logic applies in the tobacco world. Financially, it's got to be more lucrative to buy out successful companies than pay for all the R&D failures that doing it in-house would have accrued.

To take this approach a company needs to have deep pockets. It also needs to have a management team that can adjust to new opportunities. IMB meets the first criteria; we'll see over the next few years how it handles the second.

In 10 - 20 years time, I suspect nicotine will be but one choice of drug available from the tobacco companies: no longer fettered by having a leaf-only delivery system, the opportunity to provide other options is massive. All they need to do is get the idea past major governments, and they do have form on doing just that!

VRD