What are you buying today?

[Gregmal]

PCG puts, wish me luck.

 

Bravo

[EricSchleien]

More TRUP

[Ahab]

PCG puts, wish me luck.

 

Bravo

Thanks  8)

[BG2008]

Just snagged a decent starter chunk of GRIF as the opening spread was fairly narrow.

 

How many shares did you snag?  Just curious about your view on GRIF.

[Gregmal]

Just snagged a decent starter chunk of GRIF as the opening spread was fairly narrow.

 

How many shares did you snag?  Just curious about your view on GRIF.

 

Got 2,000 between 34.86 and $35,

 

First, your/the thesis is right. You won't lose money on GRIF at $35 unless you're a forced seller. I just think you're a bit early.

 

Full disclosure, on a quick bounce to high 30's I'm probably out. I think this is the low end of an opportune trading range. Done it a couple times before.

 

Longer term, I think this is something that fits the FRP/CTO mold in that its transformational while under the radar. A couple years out I think they've got a shot at doing $30M NOI. That puts the share price at $55+ with the other assets valued at nil.

 

Gabelli is + much like Winters was at CTO.

 

Management is so far, from what Ive observed, capable. Not outstanding but not a detriment.

 

Basically, Im cool with FRPH here, and I see CTO going parabolic with it's catalysts between now and next year's AGM, so I want to line up my next one. GRIF doesn't have the liquidity to just hop on in, so this is a good starter spot IMO. I believe Ive shared with you my position on CTO. Im fine going there with GRIF as well if we get $30 or below. There might not be a hard catalyst, but one of my favorite catalysts is when people say "there's no catalyst". More often than not that is when the catalyst is right around the corner.

[Gregmal]

Added some MSG under 270. Couldn't help it. Always sells off on earnings. Earnings for MSG don't matter. Hopefully the market never learns...

[Spekulatius]

Added some MSG under 270. Couldn't help it. Always sells off on earnings. Earnings for MSG don't matter. Hopefully the market never learns...

 

Added some too, but it didn’t sell off on earnings as I first thought. It was the news about the MSG Sphere project cost increase (from $1.2b assumed to $1.7B proposed) and the delayed spinofff do the sports assets that caused the drop, in my opinion. I do agree that earnings shouldn’t matter.

[alpha]

Added to FIH.U

[Lance]

MSGN

 

Thanks

Lance

[Gregmal]

MSGN

 

Thanks

Lance

 

Yup, from the looks of it, I'll likely be adding to this(again) today as well. Bottomless abyss. Odd for a company with such easily predictable and stable earnings.

 

I think Dolan is actually a plus here, as he has the power to change many of the arrangements that may or may not become favorable with MSG, and will basically be able to make whatever arrangements are necessary to get a deal done. He obviously wants to sell this, and given the capital needed for his giant TV projects, will likely have to start considering selling some assets given he isn't really allowed to borrow much against the sports teams.

[Spekulatius]

^ I passed on this because it is a cigarbutt ( albeit with a lot of life left) in a sense that it will be worth far less once the contract with MSG ( the sister co) is up. It rather deal with the foibles of MSG, as sports team valuations have  tail winds.

[Gregmal]

^ I passed on this because it is a cigarbutt ( albeit with a lot of life left) in a sense that it will be worth far less once the contract with MSG ( the sister co) is up. It rather deal with the foibles of MSG, as sports team valuations have  tail winds.

 

Dolan still controls both entities. He won't just let the contract run out and wipe out billions in value.

 

Just added more at 14.75.

 

Company has been plowing cash into debt pay down, now standing around $700M net of cash. You've got $200M FCF and even with sub decline a fairly decent chunk of it will continue to get offset by decrease in interest expenses.

[benchmark]

^ I passed on this because it is a cigarbutt ( albeit with a lot of life left) in a sense that it will be worth far less once the contract with MSG ( the sister co) is up. It rather deal with the foibles of MSG, as sports team valuations have  tail winds.

 

Dolan still controls both entities. He won't just let the contract run out and wipe out billions in value.

 

Just added more at 14.75.

 

Company has been plowing cash into debt pay down, now standing around $700M net of cash. You've got $200M FCF and even with sub decline a fairly decent chunk of it will continue to get offset by decrease in interest expenses.

 

6.5% decrease in subscriber is staggering

 

 

[KJP]

^ I passed on this because it is a cigarbutt ( albeit with a lot of life left) in a sense that it will be worth far less once the contract with MSG ( the sister co) is up. It rather deal with the foibles of MSG, as sports team valuations have  tail winds.

 

Dolan still controls both entities. He won't just let the contract run out and wipe out billions in value.

 

Just added more at 14.75.

 

Company has been plowing cash into debt pay down, now standing around $700M net of cash. You've got $200M FCF and even with sub decline a fairly decent chunk of it will continue to get offset by decrease in interest expenses.

 

6.5% decrease in subscriber is staggering

 

Same thought I had.  I know they have been able to continue to increase per-sub fees, but the volume decline is big. 

 

If you take a perhaps overly harsh view and assume that the business has no value beyond the life of the current contracts with MSG, so the business value is simply a DCF over the life of the existing contracts, what sub declines and per-sub fee increases are implied by the current enterprise value?

[Gregmal]

Subs declining obviously isn't great, but this isn't the decline of sports as we know it. The teams suck and had a summer that can only be described as embarrassing. But MSG Networks owns the content and really just needs to find a way to monetize it differently, before cable/cord cutting becomes too much of a problem. Right now it isn't a problem IMO. Sports betting will only further keep the gravy train moving.

 

But for now its trading with something like a 20%+ FCF yield with $45M in interest expenses to likely be eliminated or significantly reduced in the next 3 years. Big buybacks and dividends are also expected at 2X EBITDA, which should also be in the not too distant future.

 

Given that Dolan controls this and will do what it takes not to destroy his own company, I see zero chance at this being a 0 ever, and zero chance the distribution rights disappear in 15 years or whatever unless it is of significant benefit to another Dolan entity, which I also happen to own.

[KJP]

Subs declining obviously isn't great, but this isn't the decline of sports as we know it. The teams suck and had a summer that can only be described as embarrassing. But MSG Networks owns the content and really just needs to find a way to monetize it differently, before cable/cord cutting becomes too much of a problem. Right now it isn't a problem IMO. Sports betting will only further keep the gravy train moving.

 

But for now its trading with something like a 20%+ FCF yield with $45M in interest expenses to likely be eliminated or significantly reduced in the next 3 years. Big buybacks and dividends are also expected at 2X EBITDA, which should also be in the not too distant future.

 

Given that Dolan controls this and will do what it takes not to destroy his own company, I see zero chance at this being a 0 ever, and zero chance the distribution rights disappear in 15 years or whatever unless it is of significant benefit to another Dolan entity, which I also happen to own.

 

I agree sports aren't dying anytime soon.  In fact, the NBA seems to be getting more popular.

 

What I don't know is whether bundling has caused non-sports viewers to subsidize sports viewers, and, if so, whether continued unbundling/cord-cutting will unwind some of that.  But to your point, if MSGN can't continue to get increasing per-sub fees from traditional cable cos, maybe they can make just as much (or more) selling higher priced, but lower volume, DTC subscriptions and perhaps selling some subset of rights to the likes of Amazon, Hulu, YouTube, etc.  My understanding is that basketball is also by far the most international of the big four US sports, so it should interest companies with global distribution in a way that the NFL, MLB, and NHL likely do not.

 

Also, I agree that owning MSG likely presents a hedge against the true worst case scenario for MSGN, but I think there are several more years before you need to worry about that.

[writser]

Bought a few shares of TLF (just dipping my toes in the water) A retailer .. Fuck me. Still, quantitatively very cheap, insiders own a large stake (the writer of 'dear chairman'), some selling pressure the past few days due to a delayed 10Q because of an internal accounting audit. Leathercraft seems relatively 'Amazon-proof', company has been profitable every year the past decade, capital allocation seems sensible and revenue is stable. Market cap ~$41m, solid balance sheet with ~$17m in cash, no debt.

[Spekulatius]

Subs declining obviously isn't great, but this isn't the decline of sports as we know it. The teams suck and had a summer that can only be described as embarrassing. But MSG Networks owns the content and really just needs to find a way to monetize it differently, before cable/cord cutting becomes too much of a problem. Right now it isn't a problem IMO. Sports betting will only further keep the gravy train moving.

 

But for now its trading with something like a 20%+ FCF yield with $45M in interest expenses to likely be eliminated or significantly reduced in the next 3 years. Big buybacks and dividends are also expected at 2X EBITDA, which should also be in the not too distant future.

 

Given that Dolan controls this and will do what it takes not to destroy his own company, I see zero chance at this being a 0 ever, and zero chance the distribution rights disappear in 15 years or whatever unless it is of significant benefit to another Dolan entity, which I also happen to own.

A 20% FCF yield with a 13.5% decline in operating profit isn’t necessarily a good deal. I have heuristically come to the concluding that most of these type of value situations don’t work, and even if they do, they cause much more grief then they are worth (averaging does trading around ). Others may come to different conclusions and better results, but those are mine.

 

FWIW, I think the whole cable / TV sector is a bit spooked by subscriber losses, but MSGN are definitely the worst I have seen.

[Gregmal]

Subs declining obviously isn't great, but this isn't the decline of sports as we know it. The teams suck and had a summer that can only be described as embarrassing. But MSG Networks owns the content and really just needs to find a way to monetize it differently, before cable/cord cutting becomes too much of a problem. Right now it isn't a problem IMO. Sports betting will only further keep the gravy train moving.

 

But for now its trading with something like a 20%+ FCF yield with $45M in interest expenses to likely be eliminated or significantly reduced in the next 3 years. Big buybacks and dividends are also expected at 2X EBITDA, which should also be in the not too distant future.

 

Given that Dolan controls this and will do what it takes not to destroy his own company, I see zero chance at this being a 0 ever, and zero chance the distribution rights disappear in 15 years or whatever unless it is of significant benefit to another Dolan entity, which I also happen to own.

A 20% FCF yield with a 13.5% decline in operating profit isn’t necessarily a good deal. I have heuristically cam to the concluding that most of these type of value situations don’t work, and even if they do, they cause much more grief then they are worth (averaging does trading around ). Others may come to different conclusions and better results, but those are mine.

 

FWIW, I think the whole cable / TV sector is a bit spooked by subscriber losses, but MSGN are definitely the worst I have seen.

 

Thanks. Appreciate the cold water as I always prefer hearing the other side of things. I don't think there is much if any downside here, and likely IMO it overshot to the downside for a number of reasons, all short term. ~$600M market value decline in a couple weeks is a bit much for a company like this. The numbers may move around, but this company isn't going anywhere. I'd like to see them consider some sort of streaming option for out of network people. Plenty of people would pay $5-$8 a month in season for this.

 

That said, I only see two things that provide a catalyst for better valuation. 1) Dolan hitting the bid. The most recent RSN deals definitely support a higher valuation than todays MSGN share price. $2.5B EV is about a 40% premium 2) stacking cash for the next couple years.

 

This, after today is about a 3% position for me. I'm inclined to add a bit more to it but also probably need to adjust my allocation based off of a longer expected holding period for the thesis to play out.

[Lance]

Sold MSGN 9-20 $15 puts.

 

Thanks

Lance

[sarganaga]

A bit more Birchcliff Energy (BIREF, BIR.TO)

[Gregmal]

MSB, MSG, MSGN

[Spekulatius]

BRKB, MSG, WMB, FOX ( adds) and a starter in UNVR.

[Gregmal]

https://seekingalpha.com/news/3494406-sinclair-turns-attention-and-t-sports-nets-wsj

 

 

 

 

[Gregmal]

GRIF @35 and MSGN @14