$奥驰亚(MO)$ Altria is expected to strategically divest stake in Anheuser-Busch InBev

What will Altria Group (NYSE:MO) do with its 10% stake in Anheuser-Busch InBev (NYSE:BUD)? Bank of America thinks it's unlikely the tobacco giant will sell off the whole position when the five-year lock-up restriction expires on October 10, but also does not think holding on to BUD as a long-term investment is the best use of capital. The most likely and capital efficient scenario identified is divesting the BUD position over time.

"Time may prove to reward patience, as any triggering event that leads to a 'taxable event' could allow MO to realize the JUUL write-downs (currently 88% of its value has been impaired from an accounting perspective) as capital losses in order to help offset a capital gain associated with a potential ABI sale. We would point out that there is a timing implication though, as capital losses/gains can be carried back three years and carried forward five years for tax purposes."

BofA also notes that MO’s management aims to be a consistent earnings performer. That means earnings bumps could be smoothed over by selling down the beer position over time and using the proceeds to buy back stock when strategic.

The current market value of Altria's BUD stake is about $11.5B.

The potential BUD catalyst is part of the basis for BofA's Buy rating on Altria (MO).