Today, 07/18/23, the Value Investment Fund purchased a fourth tranche of The Walt Disney Company. The market price at time of purchase was $85.58.
Costs to complete the transaction included utilizing the Fund’s margin account. Thus, the Fund had to pay a 2% closing fee plus a $1 per share transaction fee. Total basis is as follows:
100 Shares of The Walt Disney Company $8,558.00
$1/Share transaction fee 100.00
2% Margin Account Assessment ($8,658 * 2%) 173.16
Total Basis $8,831.16
Currently, the market price for The Walt Disney Company is at a nine year low.
The Fund’s facilitator has determined that the intrinsic value for The Walt Disney Company is $105 per share. This purchase provides a safety margin of 18%. The company has earned a combined $27 Billion over the last five years. And, this includes the $2.5 Billion loss during the pandemic. Simply put, The Walt Disney Company is rock solid. The book value as of the end of March 2023 is just shy of $53 per share. It’s annual revenues are now over $90 Billion. It will earn almost $3 per share for its fiscal year end in September 2023.
Yes, it is currently dealing with several issues dampening its earnings. The foremost is addressing the streaming services and creating a model that will be cost effective. But, let’s be realistic here, all the entertainment providers are having the exact same issue. This is relatively new technology and it will take a few more years to finally drive costs down and create a division that generates cash and is highly profitable. But who is better to do this? For now, its parks, products and theater segments are carrying the company. This is an opportunity to buy a solid company at a good price. Act on Knowledge.
© 2023, David J Hoare MSA. All rights reserved.
