Walt Disney Co. (DIS)

Has been a tremendous outperformer for some time. Shorter term it has broken down below the 200 day, so we are going to have a rally back. Going back 6 weeks or so you have a higher low recently than back then. He expects a rally back to the 200.

He sold about 6-8 months ago. The pull back was on the cutting the cord of advertisers moving to digital mediums. DIS-N was captive to the traditional model. It is now at less than a 20 times multiple. It is expanding its other businesses to beyond 55% of its business.

It sold off because last quarter they said they did not see real growth at ESPN and people worried about cable. Star Wars is re-launching and there is the Chinese Disneyland which are both catalysts. It has come down quite a few pegs in valuation.

One of those dream companies, the kind that he puts on his list whenever it gets to what he thinks is not too expensive. This has happened. It is still a premium to the market at around 19X earnings, but it is a real premium company. This is the greatest content company on the planet, but also a pretty big distributor of content. The distribution side is being disrupted right now by streaming services such as Netflix, Amazon, etc. He is looking at this, but thinks it needs to come down a little bit more. Would like to see it at around 16.5X earnings, high $80-low $90.

ESPN has knocked it down. It is not the cheapest stock. They have positive drivers in merchandise, movies and the Chinese theme park. He got in recently. He will continue to add to it.

Continues to like this stock quite a bit. The concern over the cable network is overdone. Cable is only a portion of their overall revenues. Revenues are coming from studios, cable, television, consumer products and theme parks. Shanghai Disney is going to open in early 2016. More importantly in the studio part, there are a lot of catalysts that are coming up, namely Star Wars plus lots of sequels that are coming out very strong for Disney.

It is ESPN, 40% of their market value. They announced they were losing some subscribers. With the recent pull back the valuation is reasonable again.

Like everything else, this came down, but there was also a little worry about cable TV. Remember though that the primary part is ESPN, which is live so it can’t be Netflixed. Star Wars is coming soon along with the Disney land in China. Thinks the growth resumes and you are getting the stock at a 20% discount. Dividend yield of 1.27%.

Disney (DIS-N) or Visa (V-N) for a new grandson? Visa is going to be a great long-term hold, but he would have to go with Disney on this, because we have been presented with a 15%-17% pullback. However, wait until late October before buying. (See Top Picks.)

The recent hit presents an opportunity. The share price overreacted to Bob Iger when he did an interview and alluded to issues with the cable growth side of the business. They will figure a way to rationalize that business. In 100 days there is the re-launch of Star Wars, and he thinks this is going to be a great focus going forward. There are 2 years of a very, very strong line-up. ESPN is still doing well regardless of what people have been saying. Dividend yield of 1.29%.

She still likes the name. They brought down their cable subscriber growth projects. ESPN is their prize asset. It still has a lot of potential. They have a strong slate of movies coming out. The Asian park will open next year.

Stock has sold off. A lot of people get concerned about “cord cutting” (getting rid of cable). The “cord cutting” issues are not going to go away anytime soon. TV households in the US are at about 100 million, and if you take a really bearish view, the number of households that cut the cord could increase to 30 million, more than double, within the next 4-5 years. That has very, very negative implications for media companies and their ability to monetize their content. This is giving you a pretty good buying opportunity if you are a long-term oriented investor. However those secular growth concerns are not going to go away anytime soon. The short term catalysts are the Star Wars movie and Shanghai Disney opening up in 2016. Use any capital appreciation on the back of these 2 events to eventually lighten up, and then maybe move into a cable company where you are getting a cord cutting hedge, because in the event people do cut the cord, they can bump up their broadband pricing.

Price earnings multiple is 20X forward and 21X current. Still a little high, but he does have it on his radar. Thinks the stock acted very negatively to its last earnings report where it talked about some potential subscriber loss on ESPN. A great company, but he would prefer to buy it a little bit cheaper.

Loves this company. Exceptionally well-run with an extremely powerful brand, that is well diversified across the whole media sector. Investing in a company like this at these levels, you can own it for a good long time. They have come under pressure, like the whole media space, because over the top technologies like Netflix and HBO are causing investors heartburn over whether companies will be able to maintain the large subscriber base as people start cutting the cable and going for direct channel choices. Regarding ESPN, Disney has a very strong franchise with a large diversified portfolio and will be able to start offering competitive solutions, maybe even going direct to the consumers, or teaming up with a company like Netflix, etc.

Likes this very much here. There was a downgrade on the stock because of some evidence of “cord cutting” on ESPN. That is why the stock dropped off one day last week. The company has a lot of things on their plate and they all seem to tie in together.