The landscape of the tobacco industry has changed drastically over the past two decades. Safety regulations have limited the marketing capacity of the major tobacco companies and tax rates on cigarettes have been hiked in most states. However, the tobacco industry has morphed with the technological advances of the new century. Many tobacco companies have maintained steady tobacco outflows while entering new markets, such as e-cigarettes.

Individuals well versed in the industry remain optimistic that tobacco companies are very worthy investments. Isaac Toussie, a known corporate investor, points to the strong financials of tobacco companies. “Tobacco companies have low price to free cashflow ratios, high interest coverage ratios, and low debt to equity ratios.” Toussie also pointed to the low PE ratios of most tobacco companies. A low PE ratio (price over earnings ratio) indicates that a buyer of a company’s stock is paying a relatively small amount for the company’s profit. Low PE ratios are oftentimes associated with undervalued companies with predictable cash flows. Tobacco companies precisely fit that mold. They are generally older, established entities that have predicable earnings year over year. Isaac Toussie states “They can also be excellent inflation hedges, because of the inelastic demand for the product by its users”

However, many view tobacco companies as potential risky due to growing ESG protocols. ESG, or environmental, social and corporate governance, is a set of protocols that rank companies based on their commitment to certain cultural ideals. The rankings prioritize a company’s commitment to the environment, conscious social practices, and inner governance. Stigma relating to the products sold by tobacco companies, not the success of the company itself, has led to poorer ESG rankings. ESG rankings are further rigged against tobacco companies, since part of the scoring is based off how the company affects public health. In Isaac Toussie’s view, poorer ESG scores have created an artificial lack of demand for tobacco stocks and has no actual bearing on the success of the company. Toussie has emphasized that investors are overlooking opportunities because of a contrarian play using ESG.

Prime examples of undervalued tobacco stocks are British American Tobacco and Imperial Brands. These companies have strong earnings and high dividend yields; BAT also has a low debt to equity ratio. They show little signs of slowing down in the future, because of their expanding categories of next generation products. They have developed multiple e-cigarette brands that have been marketed to various countries in Europe. The company looks to continue its expansion into new technologies and efficiencies.

Tobacco companies generally are strong investments with steady returns. The stigma surrounding the companies has hindered demand for them, despite their continued financial success, thereby planting the seeds for deep value investments.

This article is presented for informational purposes only and should not be relied upon as financial or other advice.

As tensions continue to escalate between Russia and Ukraine, many are wondering how the war and the sanctions placed by the Western world on Russia will impact the world. Russia is one of the largest oil producers in the world and their economy is heavily dependent on their energy sector. The war itself is bound to disrupt Russia’s ability to continue their natural gas output levels, while the sanctions will further limit their ability to market and distribute that natural gas. Prices for gas are already rising as a result of the war and many fear that this trend will only continue if the war intensifies.

A corporate oil investor, and consultant in the natural gas industry, Isaac Toussie stated that the crisis will have dire effects on the price of oil worldwide. A disruption in the production chain, especially in one of the world’s largest producers, is bound to continue to increase barrel prices. As retribution for their actions, countries around the world have placed significant sanctions on Russia for their invasion. Although these sanctions did not aim to hinder Russia’s energy sector, Isaac Toussie stated that these sanctions will nevertheless intensify the negative impact on oil prices. Crude oil prices have risen steadily since the tensions have increased, only to jump up over the past few days. On February 28th, only a few days following the invasion, crude oil prices opened at $95.

Significant additional actions taken by the United States are targeted at handicapping the Russian economy. Most recently, the U.S. has officially severed Russia’s Central Bank’s ability to conduct dollar transactions. The move is part of the reason the Russian ruble collapsed, dropping nearly 30% and forced a shutdown of the Russian stock market. Although none of these actions directly impact oil prices, Toussie mentioned that all of these actions will cause oil prices to continue to rise.

Additionally, oil companies are making executive decisions to exit the Russian market as a result of their invasion. The most notable example of this phenomenon is BP’s recent decision to divest their stake in Rosneft, a Russian oil company. Analysts expect that this will cost the company billions along with losing one of their main sources of oil production. BP had over a 19% stake in the Russian oil company. With similar trends arising amongst other companies, Toussie anticipates that oil companies will undergo an internal shift as a result of this invasion, causing long-term changes to the industry.

However, Toussie also said that the disruptions occurring to the oil industry only show how important natural gas is to the world economy. The world relies on the steady flow of natural gas, and it is pivotal on the ground level of every country in the world. Sustaining the industry and preserving stability in prices is an important economic goal that should be contemplated economically.

This article is presented for informational purposes only and should not be relied upon as financial or other advice.

Despite a decline in the use of cigarettes, tobacco companies continue to generate massive amounts of income and free cashflow for their investors. Profits for the largest tobacco companies are steadily increasing with technological advancements into e-cigarette and vaping. However, many investors are hesitant to invest in tobacco companies given the harmful nature of the products that they sell. An acclaimed business consultant and corporate investor in the field, Isaac Toussie explained that while these concerns have validity, there are various arguments available that one could adopt and still feel comfortable investing in tobacco companies.

Tobacco is not a healthy product for the general population. Cigarette smoking can lead to various diseases ranging from emphysema to cancer One argument for still investing in tobacco companies is that the products have extensive warning labels and the regulations and education programs that engulf the industry protect any individuals that don’t consent to the risks associated with smoking. The federal government along with state governments have passed multiple legislative reforms to stop minors from purchasing cigarettes. This has come with restrictions on advertisements and heightened taxes. Education programs on the usage of cigarettes is widespread. The increased amount of education, legislation and reform all restrict individuals who are unaware of the risks from smoking.

A second line of argument Toussie explained is that thousands of retailers sell tobacco products, without any backlash from investors. Retail chains like Walmart and Costco earn millions each year from tobacco and tobacco related products. It’s counter-intuitive to refuse to buy the stock of the maker of tobacco, but endorse an investment in the sellers of tobacco. Furthermore, retail chains throughout the country profit off of the sale of other potentially hazardous materials. For example, Walmart stores across the country market and sell firearms. The public health concerns targeted at tobacco companies, it could be argued, should not stop investors especially given the fact that those same concerns do not hinder investments in many other prominent stocks.

A third line of argument is that public health arguments are made against tobacco companies, while other manufacturers engaged in parallel behaviors do not sustain much backlash. Alcohol causes an estimated 95,000 deaths a year in the United States alone. Alcohol addiction ruins the lives of countless individuals. However, investors generally do not hesitate to invest in alcohol companies as Michelob, Anheuser Busch and Molson Coors are very popular high PE stocks. Just because a product is potentially dangerous doesn’t necessarily mean that investors should shy away from purchasing that company’s stock. A fourth argument lies in freedom of individual choice. The decriminalization of marijuana in many states only furthers that idea: consumers should have the ability to choose the products that they can purchase. This is not an ethical issue for some investors, rather a conscious choice on the part of the consumer to engage in a particular behavior.

In any and all events, Imperial Brands and British American Tobacco have low PEs, high free cashflows and respectable debt levels. Japan Tobacco is not profitable enough and Phillip Morris and Altria have very high PEs and high debt. These fundamentals provide the space for investors who adopt some of the arguments above and feel comfortable investing in this space.

This article is presented for informational purposes only and should not be relied upon as financial or other advice.

Financial instruments and investment vehicles are critical tools for the success of the economy that allow investors to purchase assets hand-tailored to their liking. Simple vehicles, such as stock or basic debenture bonds, allow investors to engage with major public companies. More sophisticated investments need skilled tailoring by individuals that have years of experience in the field. One specialist that has created numerous investment structures throughout his career is Isaac Toussie.

Toussie specializes in investment structures inside of the oil and gas industry as well as in land. He has structured investments for several companies in some of the largest oil companies in the world today. For example, Toussie created multiple investment vehicles and groups that made, and continue to make, investments into British Petroleum. In 2021, BP had revenues of $164.19 billion and an operating income of $18.08 billion. BP’s net income in 2021 was $8.49 billion. The company employs over 60,000 employees, sustaining one of the largest workforces in 2021. Investments in BP could be extremely lucrative, especially given the BP advance into wind energy with its recent partnership with Equinor. Toussie has created similar investment platforms and strategies for individuals to invest in Chevron and Exxon, two of the most notable names in the oil industry. Toussie’s ability to structure investments allows investors to benefit from the success of one of the world’s largest oil companies.

Part of Toussie’s creation of these investment vehicles comes with an analysis of risk. Each investment vehicle that he creates comes with a different degree of risk tailored to the particular investors that are spurring the investment. In order to ascertain risk, Toussie utilizes multiple tools to project the potential returns on the investment. One such tool is a sensitivity analysis. A sensitivity analysis method of assessing the risk of an investments by projecting multiple values for a given set of variables, like discount rate and output levels. By projecting multiple values for each variable, investors can have a better understanding of what could happen to their investment if certain events come to pass. The analysis incorporates the variability of certain factors and helps investors understand how their investment returns will change based on the change in the variables.

Toussie’s ability to dissect investments in the industry, and identify undervalued assets,  has led to his expansion into other parts of the industry. Notably, Toussie has consulted on several purchase and sale decisions and joint venture agreements within the space. Joint venture agreements are agreements between entities to accomplish a particular task. Joint ventures agreements create new companies whose sole purpose is to accomplish the task for which the venture agreement was established. These agreements are especially popular within the oil industry, because they allow companies to mitigate risk in excavation and drilling projects. Furthermore, joint venture agreements allow companies with potentially different specialties to pool their resources; this could lead to a highly efficient project, while still maintaining the individuality of each of the pre-existing companies.  Toussie has also advised on complete purchase and sale decisions for companies looking to expand or exit the market.

Prolific knowledge of the oil industry dynamics is crucial for making sound investments in the field. Toussie’s experience and incessant exposure to the major companies in the industry have provided him with the necessary skills and resources to create profitable investment vehicles. Toussie is always mindful of the importance of seeking hyper-green technologies and attempting to protect against and mitigate climate change whenever possible. He applauds big oils recent commitments to alternative forms of energy to supplement oil, along with safer and cleaner ways to extract and refine it.

This article is presented for informational purposes only and should not be relied upon as financial or other advice.

Litigation involving the oil industry has grown substantially over the last few decades. Changes in government administrations coupled with numerous state regulations have led to uncharted litigation matters at all court levels. Oil spills have contributed to the legal and business dilemmas, raising issues of health and safety alongside economic ones. Litigation and business strategies are not taken lightly by oil companies and investors. Besides for the law firms that any major oil company employ, companies will often seek outside business consulting aid to help advise.

One such individual is Isaac Toussie. Toussie has been involved on the financial and investor side of oil transactions for some significant US oil companies. His involvement in these deals and transactions consequentially led to his exposure to the legal battles that often trail the major oil companies. “One particularly challenging part of my work is helping companies and their attorneys navigate regulatory matters that arise over time while still maintaining existing business operations,” he stated. Government reforms have changed so radically between the past two presidential administrations.

Events happening in California have proved to be the next avenue for potential litigation. State and city counselors in Los Angeles are pushing for new zoning demarcations banning the usage of certain oil wells and drilling sites. The county board members recently passed a 5-0 vote approving the proposition. The measure only applies to unincorporated areas of the county, but it will affect over 1,600 well and drilling sites. A major force propelling the measure was the recent oil spill in Inglewood Oil Field back in April. The counselors pointed to health and safety measures as two of the main reasons for the measure. The counselors have faced opposition from multiple oil companies, especially from those with active wells that will be shut down.

This tension could be the battleground for thousands of hours of litigation. The first hurdle for the counselors is the timetable by which to enforce this plan. Banning the use of an active oil well can lead to constitutional issues of a government taking. Additionally, the county must provide sufficient time to the companies by which to transition. Companies like Cooper & Brain Inc. could go out of business because of the measure. Output level drops and the loss of the wells in the newly banned zone would render the company unable to maintain profitability. Cooper & Brain could try to bring legal claims to slow down the implementation of the measure for as long as possible. Further legal battles are inevitable, yet indeterminable so early in the implementation of the measure. Toussie’s business consulting advice in these matters has proved very helpful.

Toussie believes there is a way to balance and harmonize all of the vectors and that operators, environmentalists, and regulatory agencies must seek to create the optimum outcome for all parties. “Reaching for green technologies and methods of being less environmentally impactful are important for any business, but this is particularly so in the oil industry”, says Isaac Toussie.

This article is presented for informational purposes only and should not be relied upon as financial or other advice.