Per a Wall Street Journal report on Nov 28, Altria Group Inc (MO - Free Report) is in talks to acquire a minority stake in the e-cigarette company Juul. Altria said it doesn’t believe in responding to "rumors and speculation" while Juul denied the comment. Juul was valued at about $15 billion in the latest round of fundraising. Shares of Altria rose 1.8% on Nov 29.
Altria is a tobacco giant, known for the Marlboro brand in the United States. The company has its own e-cigarette alternatives in the United States, like MarkTen and Green Smoke. It is also keenly awaiting approval from the concerned authorities to market IQOS, a “heat-not-burn” product which has been developed by Philip Morris International Inc (PM) (read: ETFs in Focus Post Philips Morris' Upbeat Earnings).
Juul’s performance has been quite impressive in the e-cigarette space. While Altria’s e-cigarette products only account for a small share of its $25.6 billion revenues, Juul happens to be a frontrunner in the $3 billion e-cigarette market, having a 75% share.
Juul’s popularity has been growing over the past year. However, the latest policies coming from the regulators could weigh on the operations of Juul. This is because Food and Drug Administration Commissioner Scott Gottlieb recently had threatened that e-cigarettes will be pulled out of the market if the agency’s new limits on the sale of fruity flavors do not lead to a slowdown in the rapidly increasing consumption among teens.
The tobacco industry has been showing signs of cooling. In 2017, cigarette smoking fell to its lowest point in its entire history. The industry seems to be in search of some kind of revival as Morningstar analyst Philip Gorham, suggests more spending on the side of companies to manufacture next generation nicotine products.
Whatever the case, against the backdrop of likely Altria-Juul deal, we highlight ETFs in detail that provide significant exposure to the company (see: all the Consumer Staples ETFs):
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
The fund tracks the MSCI USA IMI Consumer Staples Index and comprises 88 holdings. Altria occupies the sixth spot (5.6%). Its AUM is $530.9 million and expense ratio is 0.08%.
John Hancock Multifactor Consumer Staples ETF (JHMS - Free Report)
The fund tracks the John Hancock Dimensional Consumer Staples Index and comprises 50 holdings. Altria sits at the sixth position with 5.6% weight. The fund’s AUM is $26.8 million and expense ratio is 0.50%.
iShares U.S. Consumer Goods ETF (IYK - Free Report)
The fund tracks the Dow Jones U.S. Consumer Goods Index and comprises 109 holdings. Altria holds the fifth spot in the fund pool (4.97%). The fund’s AUM is $503 million and expense ratio is 0.43% (read: Shrug Off Rate Fears, Consumer Staples ETFs Are on a Tear).
iShares Evolved U.S. Consumer Staples ETF (IECS - Free Report)
It is an actively managed fund, presently comprising 126 holdings. Altria holds the seventh spot (4.2%). The fund’s AUM is $3.8 million and expense ratio is 0.18%.
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