Cinemark Holdings (CNK-N)

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).

* 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).

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

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

(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* (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.

(A Top Pick July 8/15. Down 10.65%.) (Short CGX-T) Feels CGX is one of the most overowned companies by Canadian institutional managers.

Cinemas, primarily in the US and 14 Latin American countries. Trading at about 15X earnings and 9X cash flow. Has been hurt badly by the higher US$, but as that reverses, they’ll get some of that benefit from the Latin American countries. Good balance sheet, with debt to EBITDA of about 2.3X. Dividend yield of 3.09%.

(A Top Pick Nov 19/15. Down 7.57%.) This is one that he is selling. He isn’t selling because of the general market drag down. He saw that it was breaking the downtrend, and look to put in a head and shoulders bottom, and bought it right on the breakout. It did okay at first, but then fell with the market. He is going to let it rally with the market in the next couple of weeks and then will get out of it.

Consumer discretionary tends to do well from October into April. Chart shows a long downward trend from earlier in the year. Even though the seasonals are with this right now, he would wait for it to break above its downward trend line that the chart is showing, or even go above $35.

This company makes its money on the confectionery side in the movie industry. They command a fair premium for their commercials. Stock has been trending down since April. Started moving up near the end of September. He bought this on Monday at $36. It has now had a short-term pullback, but the bigger picture is “Trend Line Break out”. If it broke down through its neck line at around $34.50, he would sell it.