DHX Media (DHX.B.TO)

(Market Call Minute.) Likes this. Had a bit of a check back, but really likes the acquisitions they have done and their whole strategy on content.

Likes it. Management team has done it all before. A lot of people debate the value of the library, but he feels the value is timeless. The valuation is hard to peg because of the acquisitions. All look good so far. You have to believe in management.

Monetized children’s libraries and now are acquiring family channel. It is expensive, but he would buy on a pullback.

Had sold a lot of his position, but is now back into it. Liked the recent Degrassi purchase. The cash flows they’re going to get from their companies is almost like having a lead order for their series that they are producing in Canada. While it looks expensive on the current earnings basis, they are effectively going to more than double their earnings and cash flow on the back of that acquisition.

Really likes the company. Not cheap, but not expensive. He likes it being able to leverage its capital position and balance sheet to buy additional assets. Recently got the Degrassi Junior High library at a reasonable price which will be an accretive acquisition. Have an extensive library of children’s material that cannot be replicated. Content is king in the media business. A potential takeout target for somebody who’s looking for big library content.

Not a fan of this company. Likes their product, but when he works through their cash flows, he doesn’t get it. Doesn’t see where the underlying product possibility is. ROE is 3%. A lot of analysts add back the amortization but he looks at the amortization of their films and wonders what kind of value his films have 2 or 3 years later.

(Top Pick Jan 29/13, Up 129.85%) Got out when he saw CEO selling some stock. Then in the fall they saw a deal to buy properties spun out of astral media. Now it is not just a pure content play. It is content and distribution play. He is more neutral now. It will no longer have this kind of growth profile.

Hard to be comfortable with media assets. You are at the mercy of who you sell these things too. Took a pass on this as it did not have the earnings predictability that he wanted.

Just signed a five-year agreement with Yu Yung Media (?) In China for distribution rights. This emphasizes the value of owning content. Acquired content in the last 3 transactions so you’ll see these kind of deals continue to roll out. Not just broadcast rights, but also includes rights tied to merchandise, licensing of toys, which has to be huge for them.

Has a small Short position on this (short-term reversion trade). The largest investor, Birchcliff, recently exited their position. Did a nice accretive transaction buying Disney (DIS-N) type properties from Bell Canada (BCE-T). This is interesting in that there is some vertical integration in the children’s content side now but it also means they are competing with some of their customers now. There could be some challenges down the road with that. He is neutral on this company.

This is in the children’s media. They bought the family channel. Has had a terrific run. A terrific holding. Yield of 0.8%.

They are in the right space at the right time. The cable companies want to buy these companies that have the content. Likes the CEO. He sold most of his position. Thinks there will be a lot of consolidation in this area. Eventually it will be take out.

Content is king and this company owns a lot of 2^nd tier kids animated videos. Content providers can now distribute their content to more than just TV channels. They can do Netflix, YouTube, etc. They have the bargaining power. Thinks it will, eventually, get taken out. Recently, bought the Family Channel and the Disney Channel off of Bell Canada (BCE-T) in order to satisfy the regulators.

Very powerful company in children’s programming. He expects it to continue higher and will eventually be bought out by one of the majors, the Disney’s of this world.

(Market Call Minute.) Really likes what they are doing. Raised their dividend 50% a couple of weeks ago. Acquisitions have been great. Their library is timeless and there is a lot of value there.