After massive share buybacks and dividends were paid, a reclusive Cayman Islands businessman has made an estimated £3.8billion from his shares in British American Tobacco and Imperial Brands.
Kenneth Dart is the scion of Dart Container, a family-owned business in the US that produces foam cups. He has benefited from a recovery of the FTSE 100 cigarette makers after becoming one the largest investors at a period when other investors shunned this sector for various reasons, including ethical ones.
Dart, who has a Spring Mountain investment company in Camana Bay, as well as other investments such as a health centre, has built up a holding in BAT (the maker of Lucky Strike cigarettes) and around 7 percent in Bristol-based Imperial which owns L&B.
Dart’s big investments coincided with Imperial and BAT, who launched large share buybacks, which helped boost their share prices.
Imperial, shares, which announced last week a £1.25billion buyback on top of the £2.1billion combined programme over the past 2 years, are up by about 25% this year. BAT also announced in March a £1.6bn buyback for this year and the next. Its shares are up 15 percent this year.
Dart’s total return over the past five years is estimated at more than £3billion, based on research by Panmure Liberum for TheTimes. He has received £237 millions in dividends and his estimated paper profit at Imperial is around £550 million. His total return amounts to approximately £790,000,000. Kenneth Dart owns more than 10% of BAT
Rae Maile is a veteran analyst with Panmure Liberum. She said, “Dart bought these positions when many institutional funds managers could not or wouldn’t.
The stock market is concerned about the future of cigarette manufacturing, partly due to the rise of new ways of using nicotine, such as vaping or heat-not burn devices. There was also the ESG (environmental, Social and Governance) movement.
“But not only has the industry proven resilient, but it has also continued to prosper. This has proved that these concerns were misplaced, and delivered a handsome return for Dart.”
The tobacco industry continues to make huge cash piles despite stricter regulations and increased awareness of health risks. This is done by raising the price of cigarettes, which in turn funds shareholder returns and new investments, such as vapes. Vaping has forced the industry to adapt to new trends
Some investors have shunned the industry, including Scottish Widows. Legal & General, Columbia Threadneedle, and other funds exclude tobacco. Axa BNP Paribas ING Societe Generale and BNP Paribas are all signatories of the Tobacco-Free Finance Pledge. This initiative is supported by the UN, led by Tobacco Free Portfolios.
Dart has not commented on the acquisition of his tobacco stakes, which has intrigued the City. In the past, speculation has been raised about whether Dart’s intention was to be an activist investor, or even pursue further consolidation within the industry.
The self-styled “investor, innovator, explorer and entrepreneur” has a reclusive reputation in the British overseas territory in the Caribbean, despite having amassed a vast portfolio of businesses there via his Dart Enterprisesinvestment company.
In the early 1990s, he moved from the United States, to Grand Cayman. His interests include property, like the Ritz-Carlton in Grand Cayman. He also has interests in retail, hospitality, infrastructure and infrastructure. A new health and wellbeing centre is due to open by 2026.
Tycoons have built strong relationships with Cayman Islands governments. Dart formed a investment alliance in 2012. The group invests in infrastructure projects ranging from recycling to roads and resorts. Dart has invested more than $1.5 billion in property. Forbes estimates his wealth at around $6.5 billion. He has built a stake at BAT, and subsequently a stake at Imperial since October 2020.
Dart has also been known to invest in the tobacco industry, and own a stake in RJ Reynolds (the American group owned by BAT). Investors have been “spooked by ethical concerns” according to him.
A source described him previously as a value investor who did not believe the tobacco industry would “disappear” tomorrow.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.