Walt Disney Co. (DIS)

He's a holder and a buyer. Just have to live with the ups and downs. It's back to free cashflow generation, can use to continue to build the business. Turned the corner, but still lots of work to do to transition the media business. 

From a loss in streaming a year ago, it broke even this quarter, poised to generate returns. Streaming is the future, ESPN will soon be added.

He sold a lot of shares when activist investor Nelson Peltz didn't get on the board; Peltz would have shaken up the boardroom and instilled some discipline

Lots of upside as they restructure and optimize operations. Valuation still quite reasonable. FMV somewhere between $140-160. Good amount of upside.

Good intellectual property. He's been on the fence and missed the huge rally. Important to look at NFLX, the best-in-breed streamer. Everyone piled in, but it's a tough business. DIS is still caught in that trap. Theme parks have been the profit engine. Inflation, economic concerns, high prices. Might be facing Marvel fatigue.

It's been a horror show for ages and the board hasn't done its job. An activist investor, Peltz, has been challenging management, and shares have been rallying from $88 to $119 over two months. The changes have been good and their costs were too high. The board needs to cut costs and find a successor to current and returning CEO Bob Iger.

Lots of issues. Streaming has proven to be an expensive endeavour, NFLX won that race. Parks franchises are waning, needing big capex. Cash-strapped. Competition is fierce. Activist ruckus. Verbal bun fight over X (Twitter). Investors get trapped by warm and fuzzy legacy feelings. Better choices out there.

That's what he did with Disney. He thought their franchise (theme parks, movies, streaming, EPSN) was worth any amount of money. But he neglected to see their weakened balance sheet, rising programming costs and bungling management. From peak to trough, shares fell more than half. And yet he hung onto his shares out of pride. Disney made some mistake, like buying 21st Century Fox's assets for too much; their former CEO was a bungler; they spent a fortune building Disney+ just as Wall Street cared about profitability and no longer subscriber growth. True, the ex-CEO got a bad hand (pandemic), but he actually lost control of the company. Eventually, the board ousted him and restored Bob Iger. Today, he still believes Disney ahs a great franchise, the balance sheet is fixed and they now have a ton of cash and believes Iger can turn things around (with smart activist investors). Disney now has enough cash if it wants to buy Hulu without straining finances. That's why he bought more shares on weakness.

Quietly, the streamers are showing some life and DIS is the safest way to play it. Disney+ is projected to show a profit by end-September.

They just hiked their dividend by 50% after suspending it during the pandemic, though barely half of pre-Covid levels. Still, this and $3 billion of share buybacks are a sign of confidence by management. They've had two straight strong quarters and the company expects to cut $7.5 billion by year's end. There remains the proxy fight with activist Nelson Peltz, but he should be happy either way with the company.

Chart looks good. Rare for a stock like this to pop 11% in a day, really positive, seems to be holding. Volume is subsiding, and this bothers him. Be really careful around $100, get out if it hits. $125 level is the next stop for a pause.

Rallied lately on positive news and strategic initiatives. Has become more shareholder friendly. Massive amount of hidden value. Not cashflow-positive yet. Great assets, but not reflected in share price. Cashflows improved dramatically. Constructive long term.

The narrative has changed. Buy.

It reports Wednesday. He expects mediocre numbers from this once-great company, some self-inflicted. Netflix is running rings around them, and DIS can't get its costs down. He wants to know why DIS refuses to put Nelson Peltz on the board.

A great long-term franchise, but they've loaded the balance sheet with debt and cut the dividend three years ago. Their ESPN is starting to struggle, and Disney+ isn't making them money. They raised the prices on the theme parks too high.