ITC has underperformed despite positive sentiment. Is the market right in punishing the stock?

Image credit: ITC


Since 2014, the ITC stock has been a laggard. But things are changing post the company’s huge investment in the non-tobacco category. There is a renewed investor interest claiming it to be a value buy, but the stock is still underperforming. Has the company got its capital allocation right? We did a thought experiment and found this.

“When we control a company we get to allocate capital, whereas we are likely to have little or nothing to say about this process with marketable holdings. This point can be important because the heads of many companies are not skilled in capital allocation.”—Warren BuffettAmerican Express, RJR Nabisco, and ITC – what connects the three? They are guilty of what Buffett has called a management sin in his annual letters. American Express CEO James

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