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  • Lions Gate: More Than Just Hunger Games [View article]
    Hi wrxster,

    No, I did not mean to say in the $30's. When I wrote the article at the beginning of December, shares were trading in the $28-$30 range. It was very hard to believe they were trading at that level.

    No, I don't see a problem with the ballooning budgets. That's typically what happens with most sequels. Part of the increase had to do with salaries. Jennifer Lawrence was paid $500k for Hunger Games, but received a bump to nearly $10 million for the sequel. They also spent more of special effects that improved the end product.

    Lionsgate does a very prudent job with capital. Even though the budget for Catching Fire was $130 million compared to the $80 million for Hunger Games, through their selling of the international rights (they do this for most of their movies) they were able to reduce their exposure to the same level as Hunger Games. These deals are also backloaded, so that they reap the benefits of over performance. They have mentioned this a few times in their quarterly conference calls.
    Dec 27, 2013. 01:44 PM | Likes Like |Link to Comment
  • Lions Gate: More Than Just Hunger Games [View article]
    Well played, sir. I had that coming to me writing an article so late at night!

    Speaking of affordability with Mortdecai, according to Jon Feltheimer, "they have again created a distinctively Lionsgate business model consisting of strong international pre-sales, a co-financing partner in Gigi Pritzker's OddLot Entertainment and a film budget that belies its all-star cast." By using partners and doing international pre-sales, they are able to take out the risk of producing bigger budget movies. That's why they've been able to have such a nice profitable movie record. An example is Ender's Game, which had a budget of over $100 million and only grossed $87 million worldwide. Though their financing partnerships and pre-selling of international sales, this will still be a profitable film for them despite grossing less than its budget.
    Dec 13, 2013. 12:35 AM | Likes Like |Link to Comment
  • Lions Gate: More Than Just Hunger Games [View article]
    Hi kev12345,

    I'm sorry to hear you are down 20%. There were several factors contributing, I think. The Catching Fire opening was taken advantage of because the sentiment was far too bullish and a lot of people bought in hoping to make easy money. People were taking profits from the giant run up this year. Also, there are a ton of options expiring in December, specifically $32 calls, and there could have been forces in play to keep them from being in the money. Just a few different thoughts on the drop. If you can hold on, Lionsgate is a great long-term play in my opinion, but you have to do what is best for you and look at all the facts. There is great visibility into the future slate and their library is filled with great content. I didn't mention Netflix at all in the article, but their growing library is worth a lot to companies like Netflix, Amazon, Hulu etc. that need content to stream to their subscribers. Also, after the first Hunger Games was released the stock took a dip as well from the $15 to the $11 range. Good luck!
    Dec 13, 2013. 12:24 AM | Likes Like |Link to Comment
  • Lions Gate: More Than Just Hunger Games [View article]
    Hi _regine,

    Yes, the article did omit that. Lionsgate has so many positives going on right now that there were just too many to mention in an article. Pantaleon's Instructions Not Included is not only the biggest independent film of the year but the highest-grossing Spanish-language film ever released in the United States and grossed $44mil domestic and $41 mil foreign. This is an $85 million total gross on a movie made for $5 million. They are even looking at a domestic remake of the movie with a potential star and a remake for Brazil according to the conference call. The movie that was released after Instructions Not Included by Pataleon, Pulling Stings, grossed $7 million worldwide on a very small budget. They are just beginning to tap into the Latino market and are very bullish on the partnership. The next movie up is Hours starring Paul Walker, which is released 12/13. It is hard to say how well the film will due given his untimely death a few weeks ago. According to IMDB, they estimate the budget was only $4 million so it could be another very profitable film.
    Dec 13, 2013. 12:04 AM | Likes Like |Link to Comment
  • Lionsgate: Ender's Game Loses [View article]
    Please read my article that was published a few days ago or read the CC transcript from last quarter. The budget for Ender's Game was $110 million, but their invested capital is significantly less. The result of the flop will be a minimal impact. They also have the Divergent series arriving next year, which is management has said is outpacing the Hunger Games books at this stage in the lifecycle.

    The company has come along way in building their library of content. In this business content is king. Just because a franchise is not generating revenue in theatres and selling dvd's does not mean it no longer has value. With Lionsgate's library of hit television shows and growing blockbuster collection, they can command more money from companies like Netflix down the road to stream their content
    Nov 4, 2013. 11:36 AM | 3 Likes Like |Link to Comment
  • Lionsgate: The Odds Are Ever In Your Favor [View article]
    Hi Gosho,

    I generally don't like to speculate on the earnings movement because it's hard to judge how the share price will react regardless of a beat or miss. However, I believe that any weakness the stock shows creates a buying opportunity.
    Nov 4, 2013. 07:45 AM | Likes Like |Link to Comment
  • Lionsgate: The Odds Are Ever In Your Favor [View article]
    mssap,

    You are correct, the final film Mockingjay is being broken out into two parts the same way Twilight Breaking Dawn was. This was a very smart move to keep the revenue pumping for another year.

    Ender's Game could end up doing okay. I just see red flags with the project. I think if it underperforms there could very well be an overreaction in the stock price, but in reality Lionsgate doesn't have much at stake in the movie. In the end, once Catching Fire comes out, all of that will be forgotten.
    Oct 30, 2013. 02:23 PM | Likes Like |Link to Comment
  • Francesca's - Weak Quarter Creates Buying Opportunity [View article]
    If the stock drops to a 10-12 PE like you say, then the buyback is even more important at this point. They can take out about 12% of the float with the $100 million which increases EPS and limits the downside. You're clearly not understanding the piece. After the earnings call, the stock was crushed and this piece was offering contrarian view of everything that was being published around that time. There were and still are some positives. If you agree with them or not, that's up to you. You clearly do not, so why don't you go short the stock? I have not read the article, but I will take a look at it. Yes, it will probably be hard for you to convince me. If you came in and actually stated facts instead of being condescending about my intelligence level and investing style (see: "you come from the school of "old and basic" value investing", I wish you can understand what he said", "All your reasons supporting buying the stock do not show you are a sophisticated investor", you know very little about FRAN's business model and the true potential of its business" etc.) maybe you would have more credibility.
    Oct 9, 2013. 09:26 PM | 1 Like Like |Link to Comment
  • Francesca's - Weak Quarter Creates Buying Opportunity [View article]
    1) The stock price drop from the $30’s to the teens makes it an attractive pickup. At the current price the PE is about 15 and the company’s plan is to double the amount of stores they have. Its PE is pretty low for that kind of growth and the buyback will reduce the float. Its IPO price was $17. They have no long-term debt.
    2) How am I deceiving myself? Please enlighten everyone since you seem to know all about their business. Maybe write an article about your opposing view? All I’ve heard is how I’m wrong but no facts or argument to back it up.
    3) When has there ever been anyone that has said a stock buyback is a negative event? It will reduce the float and help EPS. Management must feel the shares are undervalued to commit to such large buyback.

    Again, since you’re just making statements that “my article is low value”, “the author didn’t do due diligence”, “the author knows little about the company” with nothing to back it up maybe you can inform everyone of the true potential business.

    Why are long-term comps going to continue to deteriorate? How is the company not very differentiated? What is the potential of its business? I’m all for constructive criticism and opposing views, but it would be nice if there were some facts instead of just blanket statements with nothing to back it up.
    Oct 8, 2013. 06:51 PM | 1 Like Like |Link to Comment
  • Francesca's - Weak Quarter Creates Buying Opportunity [View article]
    The point of the article was that the stock price has been killed over the last few months and that the price level was beginning to look attractive after the quarter earnings release. The shares have gone from the $30’s all the way down to the teens, but the long-term story is still in-tact. Whether you believe management or not, there is still considerable room for expansion and their concept works. They also announced the buyback program, which could provide downside protection as I explained. As for the lawsuits, there are always law firms that come out of the woodwork for class action lawsuits when a stock gets whacked for over 20%.
    Here’s an example: The complaint alleges that, during the Class Period, defendants failed to disclose several adverse facts, including, but not limited to, the fact that: (i) spring and summer weather and a competitive back-to-school retail environment weighed on same-store sales growth; (ii) same-store sales were declining; and (iii) the Company was not on track to achieve the financial results defendants had led the market to expect.
    Just about every retailer could be sued for the same thing as the last quarter was ugly for a lot of retailers from Aeropostale, to Target, to Staples, to JC Penny as they recorded lower than expected profit and sales. The problem wasn’t related to Francesca’s specifically as many retailers faced the same issues the company is being sued for. I hardly expect anything to come out of these lawsuits.
    Oct 8, 2013. 12:47 PM | Likes Like |Link to Comment
  • Francesca's - Weak Quarter Creates Buying Opportunity [View article]
    It was a bad quarter that has created an opportunity for a good entry point, but it could've been even worse. It was noted during the conference call that in the current quarter the company tried to respond to the current trends in the quarter, but was unable to chase into particular trends as much as it wanted due to what was available in the marketplace.

    Looking at the multiples, at this price level Francesca's really isn't out of line compared to it's competitors (http://bit.ly/1dVCCgz). They also plan to double their store count, which I'm sure many companies on that list do not plan to.
    Sep 5, 2013. 04:43 PM | Likes Like |Link to Comment
  • Francesca's - Weak Quarter Creates Buying Opportunity [View article]
    Thanks apacheman! I'm sorry you were holding into earnings, but I agree with you that the stock will eventually rebound. I've been watching the stock, but wanted to wait until after earnings to make a move. Funny that you mention the Warren Buffett quote because that's exactly what I was thinking about when I wrote this article. I have read the last few articles on here highlighting the concerns and while I think they are valid over the short-term, I think they overlooked the positives I tried to highlight here. Best of luck.
    Sep 5, 2013. 03:48 PM | Likes Like |Link to Comment
  • Francesca's - Weak Quarter Creates Buying Opportunity [View article]
    My fiancé is a patron there, but I have also made some purchases of novelty gifts there for myself such as a decision making pad and daily mood calendar for my desk at work. I'm sure these items could be found cheaper online, but the company stocks these for mainly impulse buys. Personally, if I'm in the store I will just buy the item now instead of taking the time to order it online because I will probably forget about it anyway. Being a boutique, one of the unique things is that once the stock of an item is gone, it is usually gone for good. This could play to their advantage and make a customer purchase an item now instead of later.
    Sep 5, 2013. 03:01 PM | Likes Like |Link to Comment
  • Why Lions Gate May Not Be Worth Holding [View article]
    While Catching Fire could have a hard time meeting the domestic box office of Hunger Games, where the growth will come in play is the international segment. The revenue split was 59%/41% domestic/international for the first movie. The books weren't as popular internationally when it first came out, but investors should expect growth in the international segments as more people are aware of the series from the first movie. If you look at the Twilight series, it wasn't until the sequels where the international growth kicked in.

    You also mention that Divergent and Ender's Game are risky ventures. What you didn't mention is that Lionsgate is very prudent in their strategy with big budget movies. Typically they pre-sell international rights in order to reduce the overall risk of the movie in case it flops. These deals are back-ended though so if the movie performs they don't lose out on all the extra revenue. In the case of Catching Fire, they were able to pre-sell in many foreign territories which effectively made the budget of Catching Fire equivalent to Hunger Games even though Catching Fire cost considerably more to make. So even though Divergent and Ender's Game have the potential to flop, Lionsgate mitigates the risk through the pre-sales.
    Aug 26, 2013. 07:36 PM | 2 Likes Like |Link to Comment
  • 4 Reasons To Leap Into LeapFrog [View article]
    Hi Yougshuai,
    Thanks for the kind words. I started a small position shortly after writing this article and will buy some if there is a dip on the earnings report just released. I think it was a great report as they performed better than expected through the first half of the year and with the news of the pre-sale sell out of the new LeapPad Ultra, it should be a great second half to the year as well. Good luck.
    Aug 2, 2013. 07:25 AM | 1 Like Like |Link to Comment
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