Read my Blog
The comments below are the Opinion of James M. Kostell; factual accuracy is not guaranteed. James M. Kostell and affiliates, and Cuyahoga Capital, L.L.C.. may have long or short postions in any securities mentioned, and my trade securities without notice or update to this BLOG. Future Performance may differ substanitally from Past Performance. Nothing herein constitutes an offering of a security.
11/17/2025
In a market statistically expensive on a historical basis, interesting ideas can still be found, often in declasse corners.
Brown Forman is interesting; the class A (BF.A-$27)stock is the focus, NOT the class B. The four problems of the business are GLP-1 drugs reducing demand, tariffs, perceived lower alcohol consumption by Gen Z, and cannabis use displacing alcohol. Earnings have been in decline, although quarterly comparisons should flip positive in the 1/26 quarter (BF has a 4/30 year.) The dividend yield is 3.3% and secure; you are paid to wait. There are two potential catalysts to revaluation. BF is “fat”, and can reduce expenses, resulting in improved earnings; a sales recovery, and a weaker US $ would also help, about half of sales non-USA. Secondly, BF is a “controlled corporation” for NYSE rules; the founding family, now in its 5th generation, controls through the voting A stock about a third of the shares outstanding. The 10k states that the non-voting B stock, may not be treated equally in a corporate transaction. The fifth generation is aging, and the stock is down two-thirds from its high; a recapitalization would be logical.
Sturm Ruger (RGR-$31) is now breaking even from operations, has no debt and about $6 a share in cash. Competitor Barretta recently bought 9% of the stock paying up to about $44 and with an average cost of about $36. RGR earned almost $9 a share in 2023. RGR has reduced inventory levels both at RGR and downstream through price discounts, clearing overhang. The problem is economic weakness in RGR’s consumers, and reduced demand. The business is very cyclical. Improved sales and profits, or a corporate event, would result in revaluation.
Feel free to message if these are of interest.
