Douglas Kee Corby Spirit and Wine (B) CSW.B-T COMMENT Aug 29, 2011

Pretty steady company. Booze has always been not a bad business to be in. The way the stock is acting and the way management is acting, he expects it will be a pretty steady dividend payout. Not high risk.

Wine is the fastest growing segment in the industry. The French dictate where this company is going. He is skeptical about the new products they are trying to launch into the US. The spirit sector is very tough and there is great competition. Doesn’t see upside from here.

From a technical basis the target is bearish, but it did sort of base here a bit. The 200 day is right at $18, which will be the next battle it has to fight. The last 2 months action has been positive, but wouldn’t want to see it break below $117 to high $16s.

A good little company, but a bit small for what he does. It scores in the top 10% for volatility and has good valuation. Reasonable ROE’s at around 14%. Balance sheet is in decent shape. Dividend yield of 3.5%.

This has been a core holding for his fund since inception. They have a very nice tendency to not only pay a regular dividend, but in years when they don’t make growth acquisitions, they typically also make a very nice special dividend at year-end. They made a nice growth acquisition this year. With their relationship with Pernod, they have very nice distributorship to the US and the UK.

He doesn’t know the seasonality on this, but the technicals show that it has been in an upward trend for quite a period of time. During the last little while, it has been in a trading range between around $19 and $22. It is not unusual for a lot of stocks in the consumer staples sector to have this kind of a pattern. You want to be a buyer of the stock on any kind of weakness close to support, which in this case is around $20. This is for the possibility of a break out above the $22 level. The stock is in an upward trend which is positive. Stick with the stock as long as it stays in an upward trend.