President Robert Burnstine of Fairpointe Capital says his large position in Twenty-First Century Fox Inc (NASDAQ:FOX) is because of the company’s strong assets and margins, as well as its ability to buy back stock.
Twenty-First Century Fox, I think, just has great assets. They’re really in three primary lines of business: cable programming, television and filmed entertainment. And the real core jewels of the business are the cable assets, which generate probably 50% of the revenue and 75% of the cash flow of the company. The company has very good margins.
The assets that they own are things like the Fox network, Fox News cable network, FX, a number of regional sports networks, which I think are very valuable and don’t get accorded near the value that ESPN has but may be more attractive because you’re dealing with local content, and people tend to be very loyal to their local teams.
And they also have some hidden assets. They have a close-to-40% interest in Sky (LON:SKY), which is the European direct broadcast satellite business, which is worth several billion dollars, but they don’t get any credit for that.
The company has good margins. They throw off a lot of free cash flow. They’ve been buying back a lot of their own stock, $6 billion to $7 billion per year, which is 7% or 8% of the company annually.
Twenty-First Century Fox Inc (FOX) Creates Value for Advertisers on Cable News Side
May 12, 2014
Twenty-First Century Fox Inc (FOX) Raises Dividend 50%, Has Highest Return on Investment of All Studios
March 17, 2015
EV Energy Partners, L.P. (EVEP) Ohio Utica Shale Assets Still Valuable; MLP Trades at Discount to Peers
March 21, 2013
Bank of America Corp (BAC) Triples in Price; Stock Still Valuable
September 03, 2013
Suncor Energy Inc. (USA) (SU) Returns 5% of Current Stock Price to Investors Through Dividends and Buybacks
October 11, 2013
