# Canada Bread Company, CBY



## alexei (Jul 2, 2012)

What do you think about Canada Bread Company? The profits were down in the last quarter but overall the company seems to be a reliable dividend provider.


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## londoncalling (Sep 17, 2011)

One red flag for me is that it has zero volume for being a $1B company. At a quick glance the dividend looks reasonable and sustainable as it has paid a dividend since 1999 and has had two giant dividend increases since June of 2011. Another cause for concern in the short term is the rising costs of inputs due to the drought in the US. Crop prices are relatively high and expected to rise. I haven't looked to closely at the fundamentals but it could be a nice quiet long term hold. Interested to see what others think about it.


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## P_I (Dec 2, 2011)

londoncalling said:


> One red flag for me is that it has zero volume for being a $1B company.


Probably related to the fact that the Company is 90.0% owned by Maple Leaf Foods Inc. (source: http://www.canadabread.ca/phoenix.zhtml?c=189491&p=irol-factsheet)


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## Eder (Feb 16, 2011)

Canada Bread Announces Special Dividend


http://news.morningstar.com/all/ViewNews.aspx?article=/CNW/20131217C5224_univ.xml

I dont know how many hold this stock but it has been a chicken dinner for me....special divy is the gravy!


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## Feruk (Aug 15, 2012)

My prediction: stock is at $52 in a few months. Why?

Maple Leaf's trying to sell their 90% stake, which tells me the company as a whole is on sale. Jump from $60 to $74 resulted in announcement that the company's on sale back in October. If no deal, you'll be back to $60 shortly. What serious buyer is gonna accept the company pay out a $8 special dividend? My guess is no deal, stock goes to $60 - $8 (spec div) = $52. Other scenario is a deal gets done. Problem is the jump from $60 to $74 is part of the premium already, so I don't know how much more to expect.

This has done well, but is now a high risk, low return story IMO. If I had anything in this, I'd take my money and run.


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## Eder (Feb 16, 2011)

The special dividend may be paid out to help accommodate a sale much like CBY disposing of its pasta biz a while ago. You may be right if a sale doesnt happen but since the business is actively being shopped around does mean the current premium is justified...I hope no one buys at this level, it is much to illiquid to exit gracefully...I just enjoyed watching my income cow all of a sudden come to life unexpectedly.


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## dubmac (Jan 9, 2011)

seems a bit expensive -P/E is 26.
Would like to have purchased this a year ago.


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## Feruk (Aug 15, 2012)

Eder: If you agree that the price assumes a premium for a sale, why wouldn't you take your money and run? I'm not sure how much more you can expect if a sale goes through. Trading above book value and with a very high PE. Seems to me like lots of downside and not much upside.


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## Eder (Feb 16, 2011)

I have been trying to gradually realize some capital gains before the special dividend announcement. I have till late January to sell any shares without fear of a big dump other than -$8 on Dec 30. These low volume stocks take time to sell but luckily for me my tardiness has resulted in a nice Christmas bonus.

I certainly hope none here assume I am touting this stock...quite the contrary...

btw...Bimbo Bakeries are a potential suitor...they trade on the Mexican exchange and sell in 19 countries...pe of 56...pb of 4x otoh CBY trades at pe 27, pb of 2.74 maybe its a bargain?


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## My Own Advisor (Sep 24, 2012)

Tell me that's _not _the real name of this company: "Bimbo Bakeries" ? 

Just Googled it...


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## Eder (Feb 16, 2011)

Bimbo is Spanish for bun but I like to think an Anglo named this business lol. They do make some tasty bread in Mexico that I have sampled...nice & fluffy...stays fresh for about 6 months etc.
For any that drive around in Mexico you often see bakery trucks with "BIMBO" emblazoned in 4 foot high letters on the side.


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## andrewf (Mar 1, 2010)

Grupo Bimbo seems like the likeliest suitor. They've been expanding pretty rapidly. I don't think they are so desperate for a Canadian bakery to pay a crazy P/E. They're savvy operators and will only acquire at a reasonable price. I don't know too many companies that would be interested in the No 2 bakery in Canada. It might have made some sense for Safeway, but they divested their assets. Maybe Saputo?


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## Eder (Feb 16, 2011)

Out the door it goes ....$72/share ...grats to all rode this one.

http://ca.finance.yahoo.com/news/canada-bread-sold-1-83-billion-mexico-39-132704855.html


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## andrewf (Mar 1, 2010)

Not very surprising: Grupo Bimbo, and they didn't pay a huge premium.


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