2. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 99
The Walt Disney Company (NYSE:DIS), together with its subsidiaries, operates as an entertainment company worldwide. The company produces and distributes film and TV content, and operates television networks and studios under multiple brands, including ABC, Disney, ESPN, Freeform, FX, Fox, National Geographic, and Star. Additionally, The Walt Disney Company (NYSE:DIS) offers several direct-to-consumer streaming services such as Disney+, Disney+ Hotstar, ESPN+, Hulu, and Star+. It is one of the best entertainment stocks to consider.
On April 11, Guggenheim reiterated a Buy recommendation on The Walt Disney Company (NYSE:DIS) but trimmed the price target on the shares from $140 to $130. The firm’s evaluation of the visitation trends for Disney’s parks and resorts indicates that there is a slowdown in growth. Based on this information, Guggenheim has adjusted its projection for the company’s near-term trends and subsequently lowered its target on Disney shares.
According to Insider Monkey’s fourth quarter database, 99 hedge funds were bullish on The Walt Disney Company (NYSE:DIS), compared to 112 funds in the prior quarter. Nelson Peltz’s Trian Partners held a significant stake in the company, comprising over 9 million shares worth $784.5 million.
VGI Partners made the following comment about The Walt Disney Company (NYSE:DIS) in its 2022 annual investor letter:
“The Walt Disney Company (NYSE:DIS) is a diversified media conglomerate operating media networks, theme parks, film and TV studios and direct-to-consumer streaming services. It is the global leader in theme parks with hotels and cruise lines aimed at families. Key assets within Disney are the instantly recognisable entertainment franchises that have multiple avenues of monetisation such as Mickey Mouse, Star Wars, ABC and Marvel’s Avengers.
Disney’s share price declined due to a number of factors in 2022, presenting us the chance to purchase a long-admired business and its unique collection of valuable intellectual property assets at what we consider to be a very attractive valuation. Summarily, the EPS of Disney has declined from US$7 in 2018 to ~US$2.60 in 2022 but we believe that the earnings power of the assets has not diminished to anywhere near this extent.
Disney is currently undergoing a business transition within the Media and Entertainment Distribution division (DMED) from traditional media property distribution via third parties (i.e. cinemas and broadcast networks) to a Direct-To-Consumer (DTC) model via the Disney+ streaming service. A key element of our thesis is that the earnings power of the company is currently being masked by the marketing and content investments within Disney+ and that this will normalize over the next several years. To put this in perspective, Disney+ (DTC sub-segment) currently generates operating losses of over US$3.3bn (a negative 14% operating margin) compared to operating margins at its nearest streaming competitor, Netflix, of +15.5%…” (Click here to read the full text)
