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  • Apple: The Long And The Short Of It [View article]
    So what do you think about iPhone margins now?
    Consider its differentiation strategy:
    http://seekingalpha.co...
    Margins seem to have increased since the article came out...
    Jan 28, 2015. 02:34 PM | Likes Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    Historically, Pixar >> DreamWorks. I was disappointed with DreamWorks when it didn't follow How to Train Your Dragon with stories that showed similar quality; DreamWorks seems to depend on riding franchises like Shrek when it discovers them. When I held and followed DWA it just didn't do what I'd hoped creatively, and that has ripple effects through its whole execution.

    I think that while DIS should by all means keep looking for strategic acquisitions (DIS will get 6 movies from LucasFilm that are already planned, which will keep fueling one of the world's leading merchandise franchises for years to come), these need to be thoughtful like Lucasfilm and Pixar and not just purchases for the sake of purchases. Also: think of the alignment of brands. Do you see Shrek's fart jokes elevating a family's experience at a Disney park? How to Train Your Dragon was awesome, but I haven't seen it repeated.
    Jan 21, 2015. 12:10 PM | Likes Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    I can't comment on Sizemore or its research, sorry.

    The risk in sector concentration is sector risk. Broad exposure to different market segments offers some protection in this area, but it raises the question whether the investment team has the skill to identify bargains in so many market segments.

    Boats and RVs is so narrow that outstanding performance might be swamped by a secular trend in Boats and RVs – though this can work for you, too.

    Why pay Wells Fargo to buy BDCs for you when you can buy them yourself without the overhead? Some are really expensive in terms of overhead. I wrote a series on why I dumped Apollo Investments, and Part II discusses the fees paid to the BDC's manager. Ouch:
    http://seekingalpha.co...
    http://seekingalpha.co... (explains why Apollo was expensive)
    http://seekingalpha.co... (explains why I put the money into Berkshire)

    The big news in ACAS will be the split. After the split, ACAS will be a fee-based manager and the BDCs it manages will each have a different story.
    Jan 18, 2015. 10:59 AM | Likes Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    To answer that we need to know also the contribution of all other revenue sources. Disney groups its businesses a little differently than you want, but the latest 10k is here:
    http://bit.ly/1DYGLd0
    The annual reports paint a picture of significant contribution by services, with media networks greatly exceeding studio entertainment. But media networks include not only ABC profiting from Marvel's Agents of SHIELD, but ESPN's sports business. The value in Marvel is harder to group in one pile because its revenues are realized in studio entertainment, media networks, and consumer products. The Interactive (online games) segment is now actually making a profit, which is nice. Disney has a lot of properties that could make just rocking games.

    But back to your question: how can we know just what a blockbuster the new Star Wars flick will be? Is it an action extravaganza only, or also an Empire Strikes Back immortal drama to rewatch? Does it matter where Disney makes money on it? Games, merchandise, ticket sales, TV licensing of related media products…? I view the whole of Disney as benefiting synergistically from things like Marvel and Lucasfilm properties and am less concerned with the business segment in which the income appears, or who at Disney "gets credit". I like the trend I see in the bottom line, the trend I see in margins, and the control Disney is exerting to direct content generation where it will redound to the benefit of Disney and its owners.

    I'm not worried if ESPN dwarfs ABC in revenues; that's all good for the bottom line. But I don't pretend to understand what factors will make ESPN on its own more or less valuable over time. I do understand Disney's plan to improve margins on its content generation and distribution, and that's a place I see Disney building on its advantage in beloved media properties.

    My preference is to identify trends and factors that give a company a durable competitive advantage, and expect the durable competitive advantage to produce results over time under good management. DIS has good management now, and we have the time :-)

    For a look at how I work, have a glance at my Apple articles
    http://bit.ly/1DYGK8J
    One example is this 2012 article on why ASP decline doesn't mean enterprise profit decline at Apple:
    http://seekingalpha.co...
    Jan 14, 2015. 09:07 AM | 1 Like Like |Link to Comment
  • American Capital Ltd.: What A Share Is Worth [View article]
    Dividends historically were paid from funds ACAS was required to distribute in order to meet its tax status as a RIC (which allowed it to pay dividends from pre-tax funds). ACAS has been deliberately failing the RIC test in order to preserve loss carry-forwards ever since it suspended its dividend.

    Until the split (that will create new RIC-qualified BDCs without loss carry-forwards) or until the loss-carry-forwards are consumed (and resuming RIC status) I would not expect management to pay dividends.

    If you hear anything about the timing of the split, please post :-)
    Jan 14, 2015. 08:38 AM | Likes Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    I haven't tried looking into which of ESPN's content is worth what to it. I also don't have any expertise in the business of spectator sports.

    It stands to reason that like newscasts, sport events are in the most demand when they're in progress the first time (while they're still news). While I understand how certain broadcasts could hold value, re-runs might not have much value unless they gain recognition as classics. If it were me, I'd want to access old games that I picked, not a channel that fed me games on a schedule picked by strangers. Suppose you want to look at games with a particular player, or with a particular coach, or the like – an online subscription seems like the way to sell this access. But I have no idea what kind of business it would be.
    Jan 13, 2015. 11:35 PM | Likes Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    Thanks for that :-)
    Jan 13, 2015. 10:58 PM | Likes Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    There are a number of set-top boxes that allow one to stream cable channels to which a user already has a cable subscription. I am guessing Roku is simply another way to watch content for which users paid elsewhere.

    The Netflix model is that Netflix pays content owners a fee to show on Netflix content for which viewers need only a Netflix subscription.

    The Netflix-first model is that Netflix pays content owners an even bigger fee for content to differentiate Netflix from other outlets viewers can use to reach content. Netflix' plan to become a first-tier market involves acquiring desirable content that can't be found elsewhere. That's why Netflix is keen to buy 60 episodes of new Marvel content in the deal that starts with Daredevil.
    Jan 13, 2015. 10:58 PM | 1 Like Like |Link to Comment
  • PC sales better than expected; Apple's share tops 7% [View news story]
    I beg to differ. The number of folks coding OSS on Mac hardware is nothing to sneeze at. Even if you prefer an OS you compile yourself, you can prefer Apple hardware to competitors'.
    Jan 13, 2015. 02:43 PM | 1 Like Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    The fact that DIS gets fees from so many different distribution platforms shows that it can make a lot more content than it can fit on ABC and still have high-dollar venues in which to showcase it. The Netflix-original Daredevil is an example: this wasn't even possible before Netflix matured from a second-run vendor to a first-showing platform. And it's not just Daredevil. Netflix and Marvel are doing a family of related properties as Netflix shows:
    http://bit.ly/1u3JI5Z

    If anyone knows anything about the terms between Netflix and Marvel, please comment (and link).
    Jan 13, 2015. 02:33 PM | 1 Like Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    Glad you liked it. I learned a lot about the company in the process. I hope this helps you, too.
    Jan 13, 2015. 02:26 PM | 1 Like Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    Thank you for your kind appraisal of the piece.
    Jan 13, 2015. 12:53 PM | Likes Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    Thanks so much.
    Jan 13, 2015. 12:52 PM | Likes Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    I believe Iger really gets Disney as a value-generating machine, and his succession from Eisner really made the present business possible in my view. Until Iger, "Disney's" best films had become third-party productions Disney only distributed. Then Disney bought Pixar and Marvel and have been re-orienting to apply vertical integration. The Lucasfilm purchase came after I bought, and I approve. I had to look at it carefully to understand why its best days weren't behind it, but it's a great move for Disney and for the future of Lucasfilm's portfolio.
    Jan 13, 2015. 12:52 PM | 1 Like Like |Link to Comment
  • Disney's Alchemists Turn Lead Into Gold On Command [View article]
    :-)
    Jan 13, 2015. 12:48 PM | Likes Like |Link to Comment
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