Mike Arnold
Long only, small-cap, tech, growth at reasonable price

Dreamworks Animation: The Value Is In IP Licensing And Residuals

Dreamworks Animation SKG (NASDAQ:DWA) ("Dreamworks" or "the company") is an animated motion picture content creator, having released over 25 feature films including blockbuster smash franchises such as Shrek and Madagascar. The company derives substantially all its revenue from worldwide exploitation of its feature films in theaters and ancillary markets such as home entertainment, digital and pay and free broadcast television. Additionally, Dreamworks derives royalties from licensing and merchandising its films and characters around the world. [1]

The stock, however, has largely underperformed since its November 2004 IPO, losing about 37% of its market value over that time and currently valued at $2 billion. However, the stock has rallied significantly in 2013 on the back of a some...

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