University of Pennsylvania (Wharton)
University of Chicago
. Cohen, who joined
in 1992, is responsible for covering the tobacco and beverage industries.
Industry Outlook and Style
Though litigation has battered tobacco stocks in the past two years, Marc Cohen maintains this trammeled sector will be strong long-term. He insists that factoring the impact of present and future litigation into stock performance is no more complicated than trying to determine whether an Internet company's business plan is viable. (Of course, that's not exactly a kindergarten lesson either.)
"Our view is that aggregated lawsuits, such as class actions and third-party cases that try to aggregate claims, are basically going to fall by the wayside over the next 12 to 24 months. There will be ongoing, individual case-by-case litigation, but so far the industry's record of defending itself is quite encouraging."
Still, it's not a quick process. Take this month's ruling against Big Tobacco in the high-profile Engle class-action lawsuit. Although Cohen thinks that the ruling will likely be overturned on appeal, he predicts it will happen later rather than sooner. (In the Engle case, a Miami jury ordered cigarette makers to pay plaintiffs $145 billion in punitive damages, the largest amount ever awarded in a civil case. See our related
story.) Clients appreciate his insights into the legal morass. One voter in
Analyst Rankings -- Equity 2000
rated Cohen "equally with
Martin Feldman in being on top of or ahead of the litigation issues."
Beyond legal issues, Cohen says he focuses on two key elements in judging a company's growth potential: what markets it participates in and the strength of its brand franchise. The two cigarette makers he sees as best positioned:
. Loews, he explains, derives 60% of its sales from the Newport brand, which he calls one of the most vibrant in the U.S. Similarly, Philip Morris owns the Marlboro brand, a powerful name both in the U.S. and abroad. (Cohen said information on whether Goldman had underwriting relationships with Loews or Philip Morris was unavailable.)
Favorite stock for next 12 months:
"We believe that investors are valuing its domestic tobacco company with a highly negative value (minus $20/share). As we move through some issues in the Engle case, and more importantly as we move through the acquisition of Nabisco and the subsequent IPO of Kraft, people will reevaluate what the individual parts of the business are worth, and we think that it can bring a significant repricing of the shares."
Rate Their Stock Picks:
Which stock do you like best?
Feldman and Cohen: Philip Morris
Adelman: British American Tobacco