Corby Spirit and Wine (A) (CSW.A-T)

He generally likes the spirits and liquor business. Corby is one of the leading players in Canada but there are international companies in this space. Pernod Ricard owns a controlling interest in this company and appears unwilling to pay out the cash balance in the company as a dividend or take it private or do anything else to unlock value. This is why he exited his position. He likes the company, it pays a good dividend, it runs a stable long-term business, but it doesn’t look to be generating a high enough total return at this time. On the other hand, in a market like the present one, owning a stable cash-producing business like a liquor business is not a bad idea.

This company is a real cash machine but low growth. This is mainly a marketing company for spirits. They are bringing on their own wine now. The company is controlled by Pernod Ricard in Europe. There has been ongoing speculation that the company would take itself private but that hasn’t happened and is not likely to. Every few years they pay a huge dividend because Pernod Ricard has a lot of debt. He much prefers the growth prospects of other companies that sell and market their own products. They’ve tried some initiatives to grow, such as selling product in the US (which was a failure). The dividend is very safe but it is unlikely to appreciate dramatically.

Only one analyst covers it. Earnings estimates are lower for next year and the year after than this year. Year over year sales (reported Feb 7) were up a glacial 1% and year over year earnings were down over 20%. Return on equity is forecast at a reasonable 13% but there is no growth. At a dividend of 4.1%, there are better opportunities.

Good company. Pretty safe with it. Spirits companies are great. Strong data with Corbys. ROIC 18% with 13% in recent years. Valuation reasonable. Good dividend at 3.8%.

This has been very steady and doing quite well. It doesn't get seriously bad. Well supported and has strong backing. Has a nice dividend. Well run.

Doesn't think you're going to get much in the way of capital appreciation on this. They pay $.84. Their year end is June 30. You are not going to get much in the way of capital appreciation, it's just the distributions that you get. His model price is $24.47, 14% higher than what it closed at yesterday. He sees so much value elsewhere that it would be hard for him to stick with this.

He has been watching it. It is Canadian. It is confined to the Canadian market and so not participating as much. It is a worldwide company.