Time Warner Inc (TWX-N)

Sold this in 2017 at $99 on the proposed acquisition by AT&T. He did very well with it, but there was a bit of a deal risk on the table that came to fruition. However, the Justice Department didn't like the deal and were going to sue AT&T and block the deal. It was in court, and the stock fell into the low $90s, and he repurchased it. He would have been happy if the Justice Department had lost. The company will make about $6.75 in this fiscal year. Even if they lose, he is happy owning it. The stock will react negatively but it will recover. Dividend yield of 1.7%. (Analysts' price target is $103.61.)

(A Top Pick June 15/16. Up 39%.) He still likes this, but sold his holdings. There is an outstanding offer by AT&T (T-N), which may or may not be approved.

Sell or wait for the merger with AT&T? This has to wait for more regulatory hurdles. It is obviously having a home run with Wonder Woman and have some more DC movies coming out this year, so earnings are doing quite well. This Disney (DIS-N) have been the best performing “on results” media companies. Expects there will be more consolidation. If you own, he would take profits and buy Disney (DIS-N). He wouldn’t want to own AT&T. (See Top Picks.)

(A Top Pick May 11/16. Up 36%.) Possibly being acquired by AT&T. The takeover price is a little over $100 a share and the stock is $98-$99, so there is a little bit of upside. The stock was about $76 before the takeover rumours, which is a lot of downside if the takeover falls through. He doesn’t like that ratio. There is a chance the takeover will not go through, so he would suggest you sell your holdings.

Just sold his holdings about 4-6 weeks ago at $98.50, because he didn’t want to subject his clients’ capital to the deal risk, the risk that the deal would not happen. Pres. Trump said he didn’t like the deal, but has been very, very silent since then. Thinks it probably will happen.

(A Top Pick May 11/16. Up 36%.) He’s been selling because he has gotten such a good return and is afraid the deal might not go through. If it doesn’t go through, the stock is going to go back down. If you are a US investor, you want to wait for a year because then it turns long-term and you pay a lower tax rate.

Believes today’s price makes this a Buy. It had a bit of a failed deal with 21^st-Century Fox a couple of years ago, where they offered in the mid-$80. AT&T has now come in and offered $107.50, half in stock and half in cash. The stock is trading at a fairly good discount to that because of the deal risk. There is concern that the deal might not be approved, but many are thinking that under a Republican administration there is a good chance it might be approved. He thinks it will make $6.25-$6.50 a share in earnings. It has significant free cash flow. This is probably the least affected of all the media companies to cord cutting. They have HBO over the top, so they can now stream it to about 15 million US households without a cable connection.

(Top Pick Nov 4/15, Up 12.16%) It is still under loved. This is a content company with HBO, CNN, People, and Warner studios. It is a content and delivery company. It is exiting and they have the ability to grow. They are the least affected by cord cutting. It is an attractive entry point.

(Top Pick May 11/16, Up 9.12%) Consumer discretionary. There were fears that Netflix was the new model and so the stock was down. The content creators were still going to do fine. Great numbers and it should grow over the next couple of years at least 20%. PE is 10-15% below the market.

In his opinion they have the least exposure to the cord cutting phenomenon that is going on in the US with the unbundling of cable packages, meaning fewer subscribers. They have fairly valuable properties of Warner Bros. and HBO. Their initiative to stream HBO has been quite successful. Not expensive. Trading at about 4 multiple points cheaper than Disney (DIS-N), and growing at about 15% a year. Dividend yield of 2.21%.

Feels media companies are cheap. This is still 20% below where it was in January last year. Expects profits will increase by more than 20% over the next 2 years, at a below market P/E ratio. Dividend yield of 2.17%.

(A Top Pick May 5/15. Down 10.27%.) Really likes this company. They tripped up by projecting earnings through 2018 of $8, and are just not going to get there, so the market has punished them a little. This media company is really monetizing their content very well through HBO, the over-the-top streaming model. Will probably earn around $6 next year, so it is not expensive. They are not as affected by cord cutting as other media companies. Still a Buy.

A media company that owns HBO, CNN and Turner Broadcast. From a “cutting the cord” standpoint and a potential loss standpoint, this is probably the better positioned as compared to Disney (DIS-N), because HBO tends to be a one-off and historically hasn’t been a packaged product universally. Also, it is doing “over the top” streaming to people outside of the cable system. The street has had them in the penalty box for couple of years. He has found that this type of thing generally dissipates.