We recently published a list of Jim Cramer is Watching These 8 Stocks. In this article, we are going to take a look at where The Walt Disney Company (NYSE:DIS) stands against other stocks that Jim Cramer is watching.
Jim Cramer, the host of Mad Money, recently highlighted a surge in merger activity, pointing out that we’ve seen a significant uptick in deals over the past few days. He explained that this wave of mergers and acquisitions aligns with what he’s been predicting, a shift in M&A activity due to the change in administration.
Cramer noted that under the Biden administration, the Federal Trade Commission (FTC) and the Justice Department’s antitrust division have been very strict on mergers, often taking an aggressive stance against any form of corporate consolidation. According to Cramer, companies had grown increasingly reluctant to pursue mergers under Biden’s regulatory approach, as they faced the uncertainty of lengthy court battles with little assurance of success.
“And that’s why when Trump won in November, it became very obvious that we were looking at a deluge of M&A deals and these companies couldn’t even bring themselves to wait for inauguration day.”
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“Alright, so what do we make of this wave of deals? First, I gotta say, it’s just nice to see some mergers again and while this deluge was widely anticipated because of the change in administrations, it’s still good to see some confirmation.”
Cramer said it made him more confident in predicting that M&A deals will continue to increase, which is one reason why he recently added Goldman Sachs stock to his Charitable Trust portfolio as it has a major M&A advisory business that had been relatively dormant under the previous administration. He urged investors to consider buying the stock, noting that it’s an excellent opportunity.
More generally, Cramer expressed satisfaction in seeing so many companies once again pursuing mergers that make sense for their businesses. When examining the deals announced in early January, Cramer pointed out that while some of these deals might have faced challenges under Biden’s administration, most appear justifiable.
“So the bottom line: Gotta tell you, I’m just glad we’re back to a place where reasonable arguments like this will be considered fairly by the antitrust regulators rather than the situation we had under Biden where every takeover is considered anti-competitive until proven otherwise.
That’s very good news for the whole market, as lots of stocks will be going away. Given that we have so few IPOs, there won’t be a lot of new stock to replace it and a supply shortage, well, that is always good news for investors.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 8. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A packed theater of moviegoers watching a blockbuster film produced by the entertainment company.
The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 76
Cramer discussed The Walt Disney Company’s (NYSE:DIS) merger of Fubo TV and Hulu + Live TV which was announced earlier in the year.
“On Monday morning, Disney announced it’ll be combining its Hulu+ Live TV business with Fubo, and that’s a small media company, but it offers a streaming service that’s focused primarily on live sports content. Disney effectively is acquiring Fubo. Through this deal, I gotta tell you, they’ll have a 70% stake in the combined entity, small, but could be important. They’re snapping this thing up just to stave off some litigation from Fubo, which is trying to block a streaming joint venture between Disney, Fox, and Warner Brothers Discovery.”
Cramer remarked that following Disney’s strong announcement after the market close, the company revealed it has around 157 million global users streaming content with ads. Cramer mentioned that they had discussed increasing their position in the Trust based on these numbers, which he found quite impressive. While he noted that he was unable to make any moves at that moment, he expressed his enthusiasm about what he was seeing.
“Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense. Disney tying up with Hulu and Live TV with Fubo, that clears the way for a streaming venture with Fox and Warner Brothers. I’m not sure that project will work, but now they can at least try it.”
The Walt Disney Company (NYSE:DIS), a powerhouse in the global entertainment industry, continues to expand its reach across various sectors, with a notable emphasis on its streaming operations. In early January, it made headlines with its announcement to acquire 70% of Fubo, a video service that had previously filed a lawsuit aimed at blocking Disney’s plan to launch Venu, a sports streaming venture in partnership with FOX and Warner Bros. Discovery.
The acquisition also resolves the ongoing litigation surrounding the Venu Sports platform. Instead of proceeding with the legal dispute, Fubo will merge with Disney’s Hulu + Live TV service. As reported by CNBC, Fubo shareholders will retain 30% of the company following the merger. The deal is expected to close within 12 to 18 months.
Fubo CEO David Gandler discussed the company’s acquisition of Hulu+ Live TV, calling it a stewardship of an iconic brand. Gandler acknowledged that having two separate platforms is not ideal but emphasized the potential backend synergies. While Fubo has focused on sports and news, Hulu+ Live TV brings strong entertainment content.
Disney’s (NYSE:DIS) Hulu+ Live TV and Fubo both offer services similar to a traditional cable TV bundle, featuring a range of linear TV networks. Together, the two platforms boast a combined subscriber base of 6.2 million. It’s important to note that the deal does not include Hulu’s original streaming platform.
Overall, DIS ranks 1st on our list of stocks that Jim Cramer is watching. While we acknowledge the potential of DIS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DIS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.