In January, I had the honor to be invited to Guy Spier’s ValueX. The event took place in the village of Klosters (Davos region) in Switzerland. I had not seen so much snow since my college days at Illinois. People skied or took group walks during the day while the presentations started at 3 pm and went on until late in the evening. The event had many similarities to the Cyprus Value Investor Conference so I enjoyed it very much. Several investment ideas were presented as well as other topics. Guy did an amazing job and got everyone involved throughout the 3 days.
Personally, I presented an investment idea which is Discovery Communications. Below is my presentation which I share with you. Essentially the attractiveness of the company comes from the deal it is doing to acquire Scripps. Scripps is being bought at industry multiples, however, it is a best in class company with high margins, growth, and returns. Hence one could conclude this was a cheap price. The combined company will be larger which will allow it to negotiate higher distributor fees and attract more advertising as it will have most of the top channels watched by women. Their content is specific and differentiated with a loyal customer base. Discovery will help expand Scripps internationally. There are $350m in synergies from the deal which is mostly debt financed. The company plans to reduce leverage in the next 2 years which will increase equity value. My estimates put a $40 value in the next 2 years.
Sophocles Sophocleous - Discovery Comm
