We recently added Walt Disney (DIS US) to the International Equities Portfolio around current levels backing a turnaround in fortunes following a slide of ~37% this year alone. While we think there are numerous ways to unlock value in this owner of iconic media assets, they need the right captain at the helm. Disney famously rejected the now iconic film ‘Back to the Future’, while they did no such thing with their new Chief bringing back long-standing CEO Bob Iger to replace his previously hand-picked successor Bob Chapek. The move is garnering a lot of attention and there are mixed responses, however, at MM, we like it for a few simple reasons.
- Iger was a great leader with a sensational track record that is respected.
- Profitability over growth at any cost is now rightly being favoured by the market.
- Engagement ultimately drives profitability as it gives the opportunity to increase prices – which is what they need to do.
- To drive engagement, the content needs to be great, so the key is content, and Bob is a content guy.
- We are seeing some well-known activist investors like Dan Loeb now on the share register, seeing value in the group.
- A quality company, with quality assets now with their backs to the wall – change is afoot under the new/old chief executive (who wrote a great book, ‘The Ride of a Lifetime’ that is well worth a read)
MM is bullish DIS US ~$US96 as a turnaround play
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