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Corby Spirit And Wine: An Investment Thesis

Philip MacKellar profile picture
Philip MacKellar


  • Corby Spirit and Wine has a straightforward investment thesis.
  • Its business model is simple, the corporation is consistently well managed, and it carries strong brands via its relationship with Pernod Ricard.
  • Though its been on our watch list for years, we only recently took a position because we were waiting for the appropriate valuations.
  • Risks include – ironically – aspectsof its relationship with Pernod Ricard, defined pension liabilities, and lowinsider ownership.
  • Going forward investors can anticipate respectable quarterly dividends and possible capital gains.


Corby Spirit and Wine Limited (OTCPK:CBYDF) and (OTC:CRBBF) manufactures, markets, and imports spirits and wines. The company is based in Canada but is 51.6% owned by the French-headquartered Pernod Ricard (OTCPK:PDRDF) and (OTCPK:PDRDY). Corby Spirit’s brands include J.P. Wiser's Canadian Whisky, Lot No.40, Pike Creek and Gooderham, Lamb’s Rum, and Polar Ice Vodka, among others. Though most of its sales are in Canada, approximately 9.3% comes from international markets.

Corby is listed on the Toronto Stock Exchange under the symbols (CSW.A) and (CSW.B). The stock first caught my attention in the aftermath of the 2008-2009 Financial Crisis. It has been on my radar for years, but it was not until March of this year that we finally took a position in it here at Contra the Heard Investment Newsletter. The purchase price was CAD$14.25 for the A listed shares.

Investment Thesis

Corby’s investment thesis is straightforward. The balance sheet is consistently clean with high cash, no debt, and ample working capital. Shares outstanding have tallied 28 million for the past decade which means owners have avoided dilution and expensive buybacks. Though this isn’t a growth company, the top line has been stable for the past 10 years and net profit margins are generally in the 17% to 18% range. This means returns on asset and returns on equity have averaged in the low double digits. Instead of growth, the enterprise is focused on paying out quarterly distributions. The dividend policy calls for a quarterly dividend at the greater of 90% of trailing-twelve-month net income or CAD$0.60 per share annually.

The business plan is simple too: increase market share and brand awareness in Canada while focusing on growth abroad, strong cashflows, and high margins. Over time, management has been able to do this successfully due to its strong brands and its distribution agreements with Pernod

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long CBYDF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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