Michael Sprung
Lakeport Brewing Income Fund
TFR.UN-T
DON'T BUY
Oct 18, 2006
7.6% yield. The problem with the smaller breweries is the economies of scale and whether they are able to compete. To compete, they have to have very loyal customers. Not sure if in the long-term they have the scale to compete effectively.
Will be paying a special dividend. Brewing is a tough business. They have done very well but not sure this is the type of firm he would be looking for in a trust for long-term earnings stability.
A well-run trust. Very innovative marketing strategy. A lot of distribution growth potential. Do a good job of controlling costs. Low payout ratio. Trades at about 9 EBITDA.
They are in the value segment of the beer market. ($1 a beer!) Have recently had a $28 offer by Labatt’s Brewery, which is about a 35% increase to the trading price. If you own, he suggests you tender to the offer.