The Curious Case of Paramount... and more

Happy Monday and welcome to our new subscribers!

The S&P 500 (-12.35%) and Nasdaq (-18.88%) are not off to very good starts in 2022. On the bright side, though, this nascent downturn has created some very compelling buying opportunities.

Last week alone, the following companies hit new 52-week lows: Meta Platforms, Visa, Alibaba, T. Rowe Price, Nike, PayPal, Starbucks, Shopify, and Netflix.

Another blue-chip on that list is Unilever.

The powerhouse UK conglomerate owns thirteen different €1 billion consumer brands, including top names like Dove, Axe, Lipton, Knorr, and Hellmann’s. And a 4.5% dividend to top it all off.

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The Curious Case of Paramount

Last week, Paramount CEO Bob Bakish spoke at a Morgan Stanley tech conference and lamented the market’s sour reaction to his company’s new focus on streaming.

Two comments from Bakish that I’d like to highlight:

(1) “[Pluto TV] continues to be a rocket ship.”

I’ve touched on Pluto TV before, but the story keeps getting better and better. It’s hard to believe that the valuation of Paramount’s various business lines (linear television, Paramount+, Pluto TV, etc.) add up to just $21.2 billion.

Lots of hidden value here.

(2) “We think there’s plenty of room to move price over time.”

And there it is.

Bakish and co. are already gaming out future price increases for Paramount+. Assume for a moment that P+ reaches its 100 million subs goal by 2024 — every price increase thereafter (no matter how modest) will equal hundreds of millions of extra dollars each month. That’s a profit engine I can get behind.

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Speaking of streaming…

A surprising source of strength for Disney’s DTC (direct to consumer) mission: 50% of Disney+ subscribers don’t have kids.

That ties in well with the decision to repatriate several mature Marvel shows (like Daredevil, Jessica Jones, The Punisher, etc.) from Netflix later this week. While some tut-tut their disapproval at TV-MA shows popping up on Disney’s flagship streamer, this move signals that D+ has far bigger reach and potential than just family audiences.

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Buffett & Berkshire

Tortoise vs. Hare redux: Berkshire Hathaway has caught up to and passed the “disruptive” ARK Innovation Fund.

I guess old-fashioned value investing never goes out of style.

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Warren Buffett also spent another $1.5 billion on Occidental Petroleum last week. He added 27.1 million more shares of the Texas-based oil giant, with most of his purchases coming on Wednesday.

Berkshire Hathaway now owns nearly 12% of the company — and that could rise as high as 20% if those warrants for additional shares are exercised later this decade.

In all, Buffett has spent approximately $6 billion to acquire 118.3 million shares of OXY over the past two weeks. That stake is now worth $6.9 billion, owing largely to spiking oil prices and Berkshire gobbling up all available shares.

If only all 15% gains were so easy.

And, as I said last week, he might not be done yet…

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Disclosure: This is not financial advice. I am not a financial advisor. Do your own research before making any investment decisions.