I was recently reading through some of the financial statements of Altria, the tobacco company that is either a cause of death or wealth depending on whether you created a relationship with it as a customer or stockowner, and was struck by how the management has chosen to structure the business over the years: (1) first, it is loaded up to its gills in debt, carrying $14 billion in debt on the balance sheet which demands $1+ billion interest payments, (2) it keeps almost no inventory on hand, as the tobacco produced is quickly sent out to suppliers almost instantly, (3) and lastly, it dang near leases everything out, principally through Philip Morris Capital Corporation.
I looked through to the large American banks, consumer staples, and other food companies, and saw the same thing in varying degrees. It led me to this conclusion: Benjamin Graham’s advice that corporate bonds are … Read the rest of this article!