Netflix Seeing Starz (You Should, Too)
By Michael B. Lewis | More Articles
February 12, 2013 | Comments (1)
Premium cable company Starz (NASDAQ: STRZA ) is off to a fantastic start in its spinoff from parent Liberty Media. While some investors and analysts were frightened of competitor Netflix (NASDAQ: NFLX ) overpowering the company in the deals department, on Monday Starz showed that it, too, could make big-time profitable deals with the biggest content providers. Unfortunately for value hunters, the stock rocketed up as high as 8% in Monday's trading -- erasing some of the value appeal. But for those interested, fear not, there is still time to get in on this great pick.
It hasn't been long since I last wrote about Starz -- just a few weeks, actually. At the end of January I wrote my thesis for a long position in the company based on acquisition potential coupled with strong growth prospects and multiple correction. I don't want to be a broken record on this one, but it's a stock that needs attention now -- not later. While many value deals can sit and gestate for months before requiring action, I believe Starz will soon attract substantial attention from analysts, pundits, and money managers. Really, it's already under way. Steve Cohen of SAC Capital picked up more than 5% of outstanding shares at the end of January; value guru Jeffrey Gates snatched another 5% around the same time. With two very talented fund managers making up for 10% of outstanding shares, investors should recognize the potential here.