Cineplex Inc (CGX.TO)

Has not followed this closely, but certainly it's been challenged by a lot of the new alternative streams of entertainment. He would be somewhat reticent to jump into the theatre chain industry at this time. This is an industry that is facing massive shifts in consumer behaviour. Going out to a movie is relatively pricey.

It is really well managed and they are trying to diversify away from movies only. They have the recroom and golf. They are likely to have some success and hope to be only 30% movies in two years. The price decline is probably an overreaction. They will probably have a flat year. The dividend is safe so you could hold it for that.

He is not convinced that online streaming is why it is down. It is more likely that there is fear of a dividend cut coming. Hold off until after any cut happens. Their cinema business is under pressure. It was always viewed as a steady dividend payer but it is over 100% payout ratio now. They have a slowing growth business and will have to cut the dividend. If you saw a dividend cut that would probably be the day to buy it.

It really surprises him at how poorly this has done. He got stopped in the summer, because 1) the price action was not very good and 2) the market all around was rallying, and this one stood out like a red flag. It's too early to get into this again.

This is a conundrum. You have strong management who bought up Canadian theatre chains, and did a great job of maximizing it. The valuation got to be very high. Then we had a tough movie season last year. That is what we are struggling with. Great management usually solves problems and figure out how to drive on. He wouldn't be afraid of this, but you might want to enter this on a series of purchases. Not a cheap stock.

It's been a tough year for them. A lot of headwinds that had been building for a few years, finally hit them this year. The suite of movies was not as strong. Has done a great job of diversifying with rec room, which has been a huge success. Their Digital business is really, really great. There are too many headwinds. Dividend yield of about 4%, but are paying out 100% of free cash flow. Don't get sucked in by looking at the dividend yield. If the box office doesn't change, at some point they will not be able to sustain their free cash flow. He is not looking at this one.

2017 had a very poor movie slate, which caused the stock to pull back. Numbers are still below what most analysts were expecting, so it will take awhile. They are staying away from the movie slate as much as they can, opening the rec rooms, top golf, retrofitting theatres to increase spend in the theatres. This will take some time. Pays a good dividend.

This had a terrible 2017, and has no idea why it is down even further in 2018. Thinks the film slate in 2018 is going to be better than 2017. They are making a lot of money and are going to have very good results for 2017, and even better in 2018. He sees them recovering, but doesn't know when.

It was considerably higher a year and a half ago. The fundamental question is if people will keep going to movies. He thinks they will. People want that experience. CGX hedged their bets in a number of ways. They have VIP seats for a custom sandwich with wine. There is the Rec Room. There is Cineplex TV showing on escalators. 2013 was the third highest box office ever. It always traded at a high multiple. It has come down now and the dividend is more reasonable. It is very smart management.

His problem with it is that they have no control over their product. It will take time for them to diversify away from movies. He has a problem dealing with machines to go see a movie. He needs a human interaction. He thinks it may come back to bite them at some point. If you think it will be a great Hollywood season then you might want to buy it.

Had a big pull back. Last year, a lot of great movies came out but this last season was pretty tough. Cinemas are gradually losing customer base, and this one is trying to increase business with other things like game rooms. Believes the season will be better next year, and the stock possibly will increase. Still very expensive. An incredibly well managed business. Investing in great management usually pays off.

Got stopped out of this in the summer. This and all the theatre operators went through a very difficult summer because Hollywood failed to deliver anything interesting. Over the long run, this company will still have a place in the Canadian consumers mindset, and in addition they are doing all kinds of extra things.

There is a secular story and a cyclical story and the two have converged. It is well run. The problem is the movies. He is looking at it. It is attractive in the $50 range after tax loss selling.

2015-2016 were the best years for the box office. Attendance at movies has been sliding since 1980. However, this company has been able to raise concession prices by 60% since 2005. They’ve also been able to raise ticket pricing. They are miles ahead of the competition. Their goal is to generate two thirds of EBITDA from non-movie related activities over the next 5 years. The month of November looks to be amazing. Dividend yield of 4.5%.

All the people who bought during the uptrend are underwater, and there are a lot of them. You have to wait until the oversupply is digested. It has a long way to go. At least a couple of years, and maybe $10 on the downside would be a minimum.