Buy AT&T, Get WarnerMedia For Free

May 19, 2021 10:52 AM ETAT&T Inc. (T)WBD225 Comments
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Summary

  • Dividend cuts often present massive opportunities for value-conscious investors.
  • AT&T's DGI shareholder base was slow to see the dividend cut implied by the WarnerMedia deal, but the reaction was nothing short of desperate.
  • But if you are willing to wait another one or two years, today will very likely have represented an excellent buying opportunity.
  • The math is clear: Today, we are paying only for the legacy telecom business. The new WarnerMedia-Discovery business comes for free.

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A dividend cut as a sign of hope

Dividend cuts often present massive opportunities for value investors. A rather unsophisticated shareholder base which only looks at its quarterly payouts frequently ignores the long-term benefits of

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Having always been a learning machine, I speak five languages, have worked as a sales agent, project manager, translator, computer consultant, software engineer, built a house with my own hands, published books and essays on literature, philosophy and art, have written for magazines of various kinds in different countries. After retiring early in 2004, little by little, I have become a fund manager for some friends and myself, following the principles of value investing laid out by Benjamin Graham, Phil Fisher, Charlie Munger and Warren Buffett. In 2015 I won the Seeking Alpha Contrarian Contest and have been a regular contributor to Seeking Alpha Pro right from the start.I strive to gather above-average knowledge about my stock picks. As this takes many hours, despite managing my portfolio full-time, you should not expect me to throw out new ideas each and every week. One can't be an expert on everything, but can try to acquire deep knowledge about a careful selection of businesses. Only knowledge can provide the required conviction to profit from temporary market inefficiencies (i.e. buy into a sell-off). My Investment Strategy Statement can be found here.Legal Disclaimer: My contributions to Seeking Alpha, or elsewhere on the web, are to be construed as personal opinion only and do NOT constitute investment advice. An investor should always conduct personal due diligence before initiating a position. Provided articles and comments should NEVER be construed as official business recommendations. In efforts to keep full transparency, related positions will be disclosed at the end of each article to the maximum extent practicable. I am not registered as an investment adviser, nor do I have any plans to pursue this path. No statements should be construed as anything but opinion, and the liability of all investment decisions reside with the individual. Although I do my utmost to procure high quality information, investors should always do their own due diligence and fact check all research prior to making any investment decisions. Any direct engagements with readers should always be viewed as hypothetical examples or simple exchanges of opinion as nothing is ever classified as “advice” in any sense of the word.

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