Feb 12th 2011 6:44PM Eric,
Thanks for commenting on my article.
I think the takeaway from this announced strategy is not so much that it is groundbreaking, for as you correctly point out, LGF has engaged low-budget fare in the past.
I believe the salient point for shareholders lies in the hope that management will make budgets and advertising costs a big focus from this date on. However, that requires discipline...something Hollywood has precious little of. And, as we know, Hollywood doesn't have a lot of regard for other people's money.
One opportunity I think LGF should exploit is the idea of making sequels to franchise properties for about the same amount of money as the original. Imagine if all the Saw features cost less than $2 million? Can't be done? It would be difficult, but not impossible. If the guy who played Jigsaw wanted too much money, either re-cast the part, or get creative to explain his absence. And above all, reduce talent participation on profits...besides the obvious economic benefit, it would help to eliminate the problem of sweetheart deals.
Best of luck with your shares...
Feb 10th 2011 2:51PM Efficient Affrontier,
Thanks for commenting on my article and providing your insight.
I'm glad that you seem to agree with some of my thoughts. Although it might be a scary time to even consider looking at this stock given the bad news on "Guitar Hero", it nevertheless could be valuable to at least consider the contrarian point of view. Still, there are big risks here, and everyone should be aware of them.
Feb 9th 2011 5:28PM Dan,
As always, solid advice on your part, and I hope the readers take your thoughts into consideration.
Yes, I am indeed too emotional about this stock in many ways. It's the holding I probably know the best.
I figure, like you say, that the stock may pause, and that equities don't go straight up, so I felt I needed to alert readers to this possibility, especially if they are thinking of beginning a position in the Mouse.
Besides stops, I was thinking about doing some covered-call writing as well. You're right, though, I should stop second-guessing on this situation.
Thanks for commenting on my article. Good to see that you are investing at a young age. Do your own due diligence, but I will say that Disney may be a good long-term investment at this point, but be sure to watch the dividend growth. I feel this company isn't as shareholder-friendly as it should be in this regard. Perhaps that will change in the near future? Who knows. Another thing is you don't get quarterly dividends, a fact that irritates me to no end.
Feb 3rd 2011 6:32PM Dan,
Thank you! Yes, Disney has finally hit the $40 level. It has been a long road indeed. Let's hope it stays above $40. The stock embarassed me last year when I thought it would hit the mark either before or around the time of Toy Story 3. I definitely noticed the move this week.
I like YUM, but I would say I prefer MCD (at least for now). MCD has a more comforting blue-chip appeal. I wasn't thinking so much of the food issue you referenced, but that's a good point; I was mostly considering the chart's potential.
Dec 1st 2010 3:14PM Martinemily:
Thanks for the comment. I think you offer a good counterpoint to my piece.
Nov 4th 2010 6:49PM BHarrison:
You bring up an excellent point, and it is well-taken. After what we've been through the last couple years, nothing can be taken for granted. I own GE, so believe me, when that dividend was cut, I was aghast that the unthinkable actually occurred.
But I also own KO. Let's think about this: KO actually raised its dividend through the economic crisis. I expect another increase in February of next year. Does this serve as evidence that KO can survive long term? My opinion: I think it does.
I've come to enjoy my KO position more and more. I like the cash flow and the effective-yield prospects. I can't predict the future, but I'm hoping for the best.
Sep 28th 2010 9:01PM Excellent article. I especially love the inclusion of "Pi." That was an extremely original, innovative project. And "Trading Places." Before I learned about the stock market, I was so confused by the climax in the trading pit.
Here's another one for consideration: "Other People's Money" starring Danny Devito. Great flick, especially the latter's speech explaining his side of the argument in the hostile takeover.
Sep 23rd 2010 1:55PM Dan, this is a good point, you're not being picky at all. It does sound confusing.
I'm invoking the trading idea that if a stock goes past a certain resistance level, on breakout volume, it could be a buy. Sometimes it makes a buyer more comfortable knowing that a range has been broken out of.
But, if a stock isn't going to break out, then there may be no choice but to wait for a further pullback before buying.
BBBY is doing well fundamentally...it's the technical aspect that people have to worry about.
Aug 13th 2010 3:06AM Hi Dan,
The problem with Disney these days is that I believe shareholders aren't putting the kind of pressure that they should be on management to produce better returns. It is true that stock price isn't everything, but if stock price is to go down, then a good dividend must be present to offset such loss and to offer support.
I also fear that Iger is being given too much of a pass. So far, I am unimpressed by his performance. While he seemingly buys everything in sight, he can't get Wall Street to care. Perhaps it isn't his fault, but if he isn't properly communicating the Disney thesis to the smart money, then is it time for him to step aside? In other words, should he leave before he becomes an ineffective Eisner?
Jun 30th 2010 3:54AM Believe it or not, ssyk3s, I actually do wonder if Disney stock would have been better off if Iger hadn't allocated a capital premium to acquire Pixar.
That $6 billion or so could have gone to share repurchases and/or dividend payments. Or, it could have funded animation projects that would have been less costly than purchasing Pixar.
Even though Pixar has a 100% track record, we all know that the movie business is a risky one. Disney could have used the funds as seed money for new franchises. Taking chances on many films, as opposed to the annual Pixar offering, might have generated the same amount of box office as what has been generated with all of Pixar's post-acquisition offerings. Plus, we don't know how much the intellectual resources over at the studio take out of the cash flow delivered by Toy Story 3, Up, etc. Perhaps they take more than we think...it's hard to tell, because this is not disclosed. But I speculate because something is causing the stock not to rise.
If you want to be in the movie business, you have to be fearless; you must take risks. For all of Michael Eisner's faults, I enjoyed his shark-like insouciance in regard to Hollywood: why pay an overvalued premium for Toy Story 3 when you can make it yourself? Sure, it could flop...but so what? Move on to the next feature.
Actually, this leads to a thesis I have mentioned many, many times here on the site: the most salient aspect of a movie deal is the reduction of exposure to profit participation. Instead, focus on concept, keep the budgets low, and take as many chances as you can.
What would you rather do: spend big bucks on Avatar-like bets, or fund the best Blair-Witch/Paranormal-Activity concepts? What has the better ROI potential?
The other alternative, mentioned by several pundits, would have been to simply keep the Pixar relationship by offering a George-Lucas/Steven-Spielberg deal: act as a distributor taking 8% - 10% of the gross, and give the rest to the studio. I didn't like this scheme previously, but now I'm thinking it could have saved a lot of capital.