Brooke Thackray Cinemark Holdings CNK-N WAIT Dec 15, 2015

*LONG* (Pairs trade with a Short on Cineplex (CGX-T). Trading at two thirds of Cineplex’s valuation, a bigger company, more liquid with better organic growth.

(Top Pick Nov 4/15, Up 15.80%) The second largest cinema company in the US. 40% of their business comes from outside the US, mostly from Latin America where the average age is lower than the US. They make a lot of money in the concession area and that is where the margins are.

*Long* A pairs trade with Cineplex (CGX-T). This is about twice the size of Cineplex in terms of their screens.

(A Top Pick May 4/16. Up 16%.) This is movie theatres in the US, as well as theatres in Latin America.

* Long * Pairs Trade: *Long* CNK-N /*Short* CGX-T. Canadian long only managers always buy CGX-T as a recession proof business. It is a good company, but very expensive. It is twice the valuation of CNK-N. (Analysts’ target: $58.50). CNK-N is more focused on the cinema business. It has 3 times more screens. It is a bigger, more liquid name and has a better dividend yield. (Analysts’ target: $44.00).

It could just as easily have been CGX-T. CNK-N has assets in South America as well as the US. It trades at a lower multiple than CGX-T. We will get a better slate of movies for 2018. They are going into the luxury theaters. In Brazil you can raise your prices even when attendance is flat. It has a 3.4% yield and he thinks that is decent. They have the ability to grow and raise the dividend. (Analysts’ target: $44.00).