ReynoldsAmerican Inc. (RAI)

(A Top Pick March 29/16. Up 32%.) This received a takeover bid a number of months back. Smoking has actually not declined to the degree that you might think, and prices have held up much better than would be expected.

He likes the name. He is revisiting it. It has a fairly low beta. 3.3% dividend. Higher highs and higher lows. It is not cheap, but you are getting that low beta profile.

Tobacco, but tobacco that is virtually all 100% US centric. Has no emerging market exposure, currency risk, and has acquired Lorillard. There is another tailwind that is positive for them, which is gas prices. 50% of all cigarette purchases occur at the gas station. Dividend yield of 3.33%.

Has a great yield and a great secular trajectory on growth. This falls broadly into the “sin stock” basket with tobacco. He worries that the pricing ultimately gets to a point where it becomes prohibitive. It hasn’t found that point yet and the price mix is just fine. A long-term secular grower. A good one to play with a reasonable valuation.

Acquired Lorrilard tobacco, which was big in vapour sticks. Thinks there is money to be made here.