Published Tue, 13 Oct 2020 06:36:36 -0400 on Seeking Alpha
Seeking AlphaLong Ideas | Services Why Dan Loeb Wants Disney To Cease Its DividendOct. 13, 2020 6:36 AM ET|| About: The Walt Disney Company (DIS), Includes: CMCSA, DISCA, DISCB, DISCK, NFLX, T, VIAC, VIACAby: Bram de HaasBram de Haas Special Situation ReportGenerate Consistent, Uncorrelated And Attractive Risk/Adjusted ReturnsSummaryFamous activist investor Dan Loeb of Third Point Capital is urging Disney to slash its dividend.
He wants the company to make bold investments into a single DTC offer.
In his view, Disney needs to step up content creation in a significant fashion.
The firm should easily make back its money over time in increased lifetime value of subscribers.
Dan Loeb of Third Point Capital just sent a letter to Disney (DIS) CEO Bob Chapek. Loeb has a reputation for particularly vicious letters to executives. But this letter seems supportive while nudging the company to be bolder. Perhaps published publicly to gather support from other shareholders or test the waters to the benefit of the company. Perhaps to encourage Chapek to continue its DTC efforts despite an early failure. I can only guess to Loeb's motivation but as I've recently learned from former activist non-GAAP Mike when the public letters or decks come out, the activist's efforts behind the scenes could be stalling.
For what it is worth Disney is Loeb's largest position as per Third Point's 13-F but this doesn't reflect investments in International holdings as well as other asset classes or short positions.
I wanted to dissect Loeb's letter as I think Disney is a case where I've long been confounded by the incongruence between its valuation and that of its primary contender, for the crown as the king of media, Netflix (NFLX).
Loeb starts the letter off saying he appreciates Disney's focus on direct-to-consumer or DTC. He agrees with the releases of Hamilton and Mulan into the DTC channel, he is eager to hear more about it on the upcoming investor... Read more
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