2. The Teletubbies (DHX Media)
Debra Fine, founder and president of Fine Capital Partners in New York, told Sohn attendees that her long exposure is in just a handful of names. Her strategy is time arbitrage, taking advantage of short-term dislocations in stock prices. DHX Media, a Canadian-based kids’ content company that owns such shows as Teletubbies and Caillou, is one such name in her portfolio. Children’s media, she argues, is going to be a beneficiary of repricing.
Speaking on Monday, Fine said DHX was trading at about $4 a share, while she pegs fair value at $20 to $30 a share. (As of 10:30 a.m. ET Tuesday, the stock was trading at $4.35.)
The children’s media company recently produced 60 new episodes of Teletubbies which became popular in the 1990s. These are re-imagined for a new generation. Unlike adult content, children’s content doesn’t age; kids don’t mind watching the same episodes over and over. Global distribution is easier, Fine said, and the cost to produce it is a fraction of the price of producing adult content. Children’s media also comes with a very profitable merchandising and licensing opportunity.
And now, streaming services such as Netflix and Amazon are looking for good children’s content to add and are bidding up the price of such shows.