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This has generally been a good buyer of businesses which they run for a while. What he has noticed over the last couple of years is that the discount to the net asset value has really narrowed. They used to trade at about 50% of their NAV, and as they have continued to do accretive deals that has narrowed somewhat. He doesn’t find it that attractive on a valuation basis.
This has been one of the more frustrating ones in his portfolio as they have done nothing and they keep missing on the earnings. This is a stock trading at around $6 with a market cap of around $500 million with about $300 million in cash. The bottom line is that it is such a cheap stock. It is a bit of a value trap because it seems to get cheaper, but the earnings are just not growing. The move into digital media should help. He thinks all of this is worth $8-$10 a share.
This has been the greatest growth stock over the past 40-50 years. What he likes is the way they continue to change and adapt to the market that is out there. More importantly is that they take all of the content and cross sell it in the various media, whether it is television, gaming, merchandising, theme parks, etc. There is no bigger owner of content globally. Market multiple is only 20X for all of this. Dividend yield of 1.04%.
Have done a pretty good restructuring over the past couple of years. A rising interest rate is going to benefit the life insurance companies. They reduced their exposure to the stock market volatility pretty dramatically. More importantly, their core earnings growth is coming through. Have growth in Asia and strong growth in wealth management. Trading at a discount to what insurance companies typically have traded at, and a big discount to what the banks are trading at. Dividend yield of 2.96%.
Uranium is one of the few commodities trading at a discount to its global cost of production, of around $60 a ton. You are not going to see new supply from mines until you see something around that price. The long-term contract price is around $50 and the spot price is around $35. With this company, you are effectively buying uranium at a bit of a discount at around $33-$34. At some point there will be a rise in the global cost of production. There are a couple of catalysts including 1) all of the Chinese reactors coming on in the next couple of years, 2) a restart of some of the Japanese reactors and 3) supply is going to be constrained with no new supply coming on.
He likes the gold sector in general as he thinks the US$ eventually comes off. However, he would not put this company anywhere near the top of his list. They are still paying for their overexpansion of the past decade or so. Having to sell production right now and get the debt down is going to hamper their growth going forward. He would rather buy midsize Canadian producers that are showing production growth, have a clean balance sheet and might get taken out. This company’s balance sheet is still a mess; their production profile is not that good and they still have to sell assets.