It is my opinion that LGF is due for a correction. The Hunger Games is LGF's only blockbuster franchise, and it will run its course within 2 years. If you are a gambler you may want to hold LGF up to the release date of Mockingjay 1, but I warn you with all sincerity, LGF can not sustain it's current valuation without a massive surprise hit. In my estimation, without The Hunger Games, LGF is at best a break even company. On top of that, management is greedy. LGF as a whole had a net income of $182 million in the past 4 quarters (google finance) while the CEO alone pocketed $66.3 million in cash and stock. On what planet should the CEO earn 1/3 of what the company pulls in? Sell now before hedge funds blind side all the little guys and drive this stock back down to $25.
Divergent is still out there as well. It was a very compelling movie, maybe not the Hunger Games movies, but how many Hunger Game movies are out there, besides the Superhero movies? Being too negative. When LGF gets with Alibaba, it opens up other doors that were prevously closed in China, then they don't strictly have to rely on just these productions.
Thanks for the links Outlaw...good reading and very relevant to LGF. The analysts made a very clear point on the last conference call to understand that their 15.5% effective tax rate is transferable to acquirers OR would still be in effect if LGF makes any acquisitions.
A short term correction may very well be in store. However the long term outlook for LGF keeps getting better. It is true that the CEO is way overpaid and that net income currently is weak. Part of that is the costs that they are incurring. Last year they wrapped up production on both Hunger Games films. They should now be already paid for except marketing. They have spent money on Divergent which is likely to build on it's solid (if not somewhat disappointing) launch of the new franchise. With Mortdecai and Now You See Me 2 also coming out next year expect next years numbers to be significantly better.
Throw in the soon syndication of Anger Management and the other success in TV such as Manhattan, Orange is the New Black, etc. LGF is doing a great job of diversifying their income streams. I have been very critical of the cheerleaders and pump and dump artists on this board who predict LGF is going to the moon, going to be bought, or become the next Netflix. If you look past those ridiculous claims and focus on what is really going on and where they are really growing revenue and where there expenses were you would see that the long term future is very bright.
Again short term it may correct and drop back down to $25 but then I will do what I did last December which is double down on my position (which I just took profit on the extra at $32 after earnings and still hold my original core position). I am an investor and not a trader. A correction based on selling by the short sighted is nothing more than a buying opportunity if you are in it for the long haul.
We went through this last Jan when you had doubts and said it was fully valued at 30.54. I told you that it was worth more and it took a while but it got there. This time next year it will be worth at least $35-$40. Don't be distracted by the increased costs now because you have to spend money to make money and this was the year to spend it and next year will be the year they will make it.