Valuentum Exclusive Analysis for the Discerning Investor

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Apr 19, 2022

AT&T and Warner Bros. Discovery Go Their Separate Ways
Image Shown: AT&T Inc is spending heavily to grow its 5G wireless network while expanding the reach of its broadband footprint. Image Source: AT&T Inc – March 2022 Analyst & Investor Day Event Presentation. On April 8, AT&T Inc closed the merger of the WarnerMedia business with Discovery to create a powerhouse in the media and entertainment industry after then-Discovery shareholders voted to approve the deal on March 11. The new entity, Warner Bros. Discovery Inc, is home to various streaming services (HBO Max, discovery+, CNN+) along with linear and premium TV channels (Discovery Channel, HBO, TNT, HGTV, CNN, Animal Planet, Adult Swim, Cartoon Network). Warner Bros. Discovery began trading on the NASDAQ stock exchange on April 11 with shareholders of AT&T receiving 0.241917 shares of WBD for each share of T they held at closing. Part of this process involved Discovery, now Warner Bros. Discovery, consolidating its share class structure. In return for spinning off its WarnerMedia unit, AT&T received $40.4 billion in cash and the retention of certain WarnerMedia debt. Let's dig more into this separation in this note.

Mar 10, 2022

AT&T’s WarnerMedia Unit and Discovery Are Close to Finalizing Their Blockbuster Merger
Image Shown: Announced back in May 2021, the blockbuster merger of AT&T Inc’s WarnerMedia unit with Discovery Inc is expected to close in the second quarter of 2022. Image Source: AT&T Inc & Discovery Inc – May 2021 IR Presentation. The blockbuster merger of WarnerMedia, currently a part of AT&T Inc, with Discovery Inc. is getting closer to completion. On March 11, Discovery shareholders voted on whether to proceed with the transaction. AT&T does not need to secure shareholder approval through a vote to close the transaction. AT&T intends to reduce its annualized dividend to $1.11 per share ($0.2775 per share on a quarterly basis) down from $2.08 per share currently ($0.52 per share on a quarterly basis) after the merger closes. This pending payout cut has stung investors, as has AT&T’s deal making over the past decade. If everything goes as planned, WarnerMedia and Discovery are set to close their merger during the second quarter of 2022. Let's dig more into the details of this deal.

Nov 30, 2021

We Remain Bullish on Disney’s Capital Appreciation Upside Potential
Image Shown: Shares of The Walt Disney Company have shifted lower over the past month, though are still bullish on its capital appreciation upside. Our fair value estimate sits at $192 per share of Disney. The Walt Disney Company reported fourth-quarter earnings for fiscal 2021 (period ended October 2, 2021) on November 10 that missed consensus top- and bottom-line estimates. While the company’s ‘Disney Parks, Experiences and Products’ segment (includes its theme parks and resorts operations) staged an impressive turnaround last fiscal quarter, its ‘Disney Media and Entertainment Distribution’ segment (includes its video streaming businesses) grew at a slower pace than expected. Shares of Disney sold off after its latest earnings report, though we remain confident that the company’s free cash flow growth outlook remains stellar and continue to view Disney’s capital appreciation upside potential quite favorably. Disney is included as an idea in the Best Ideas Newsletter portfolio.

Aug 6, 2020

Disney’s Video Streaming Strength Shines Through Latest Earnings
Image Shown: The Walt Disney Company recently reported earnings which highlighted the ongoing success of its video streaming strategy. Shares of DIS surged upwards on August 5, 2020. On August 4, The Walt Disney Company reported third quarter fiscal 2020 earnings (period ended June 27, 2020) that missed consensus top-line estimates but beat consensus bottom-line estimates. Shares of DIS were higher by ~11% on August 5 as of this writing, as investors looked past its weak historical performance (which was expected) and towards Disney’s improving outlook. We appreciated the announcement that Disney now has over 100 million paid subscriptions across its “portfolio of direct-to-consumer services” including Disney+, EPSN+, and Hulu (Disney owns 67% of Hulu’s equity). Disney’s business model has faced acute stresses due to the ongoing coronavirus (‘COVID-19’) pandemic, making its video streaming growth strategy all the more important. We continue to like shares of DIS at a modest weighing in our Best Ideas Newsletter portfolio.

Jul 8, 2020

Realty Income Updates Investors
Image Source: Realty Income Corporation – July 2020 Institutional Investor Presentation. The real estate investment trust Realty Income recently provided investors with some key financial and operational updates. Realty Income primarily invests in single-tenant commercial properties in the US, Puerto Rico, and the UK, and we include shares of O as a holding with a modest weighting in the Dividend Growth Newsletter portfolio. Most of Realty Income’s tenants have continued to pay rent during the ongoing coronavirus (‘COVID-19’) pandemic, though tenants in select categories have been unwilling or unable to pay during these challenging times. In particular, Realty Income’s movie theater tenants did not pay rent in June or the second quarter of 2020, according to the REIT. Realty Income’s ongoing access to debt markets combined with its ample borrowing capacity under its revolving credit facility has enabled the company to keep making good on its monthly dividends during the pandemic. Shares of O yield ~4.7% on a forward-looking basis as of this writing (at an annualized payout just south of $2.80 per share) after the firm pushed through its 107th monthly dividend increase in June 2020.

Jun 21, 2020

Warren: Four Ways to Play the Market at This Juncture
Image Source: Daniel Lobo. In this piece, we examine where the economy and stock markets have been recently, where we are now, and where we are going next. We also highlight four key ways to play this volatile market. We think this is a helpful way to think about overall portfolio construction, especially so that one does not overly expose themselves to a particular set of risks that could come to fruition—like an extended downturn in the economy or a rapid discovery of a vaccine for Covid-19 on the other hand.