More Than Jack
Recently, I made the Louisville-based company my midcap pick in the booze biz.
Investors interested in the liquor business know that Brown-Forman’s (BF.B) biggest brand is Jack Daniel’s. However, this family-controlled business has grown into so much more with CEO Paul Varga doing a masterful job growing its business. And today, its operating margins are higher than most of its peers, including Diageo (DEO).
The only thing missing from its brand lineup is a nice rum to compete with the likes of Bacardi and Captain Morgan. (If you’re reading this down in Louisville, might I suggest buying Eldorado in Guyana. They make some of the best rum at a reasonable price.)
The Brown family currently has four members on the 11-person board. As a family, it owns 27.5% of the equity and 69.3% of the votes, so it’s very much in control. During the past 10 years, it has achieved an annualized total return of 15.1% — 706 basis points higher than the S&P 500. This is a stock I believe fits nicely in almost any portfolio.