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Hollywood Media Corp. (HOLL) Message Board

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  • marios188 marios188 Mar 11, 2011 2:39 PM Flag

    Company buys for $2.05, but we are trading at $1.60???

    There were three times as many shares tendered which means 2/3 of people were not able to tender. Many of them bought shares in the $1.90 levels for the hope of tendering at $2.05. Now they are selling those shares. It is just a matter of time before they are done and the stock will recover a bit.

    The funny thing is that today's sellers have absolutely no idea that they are selling something worth close to $3 per share for only $1.60.

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    • Yeah...it will pay to be long on this..thanks!

    • Marios188: I am a long time follower of this stock. What do you think of my bull thesis?

      -- HOLL has about $10MM in cash; no debt. And the company has very little costs since they sold Broadway.com in 12/10, which was their main operations.
      -- Owns an $8.5MM 5-year note that pays 12% annual interest (related to the sale of Broadway.com).
      -- Owns two small businesses that are worth at least a few million dollars: 1) CinemasOnline, which is an advertising-related business in the UK; and 2) a book-publishing-related business. The company said on 3/19/10 in their 10K that they have resumed a strategic review process, "which may help us realize the full value of our assets in the interest of our shareholders."
      -- Owns 26.2% of Movietickets.com (online movie ticketing). Trends at MovieTickets.com are solid due to an increasing adoption of online movie ticketing (due to smart phones, etc.). Movietickets.com has not paid a dividend in a long time, which may mean one is soon coming.
      -- There are only two players in online movie ticketing -- Fandango.com & MovieTickets.com. Comcast bought Fandango in '07 for $200+MM, which implies a nice valuation for MovieTickets.com, which is arguably the better asset. Next catalyst here is the transfer of the Lowes and Kerasotes theater circuits from Fandango to MovieTickets.com once their contract with Fandango expires in 1H 2011.
      -- The Movietickets.com stake is probably worth at least $40MM and management is highly incentivized to sell it; Fandango potential buyer? Or maybe the two merge and go public??
      -- HOLL may eventually get up to $22MM in earn outs owed to them from selling Broadway.com and Hollywood.com (a few years ago).
      -- Has ~$130MM in NOLs. So, any deals are basically tax free.
      -- All this vs ~$36.4MM market cap (23,179,066 shares outstanding at 1.57).

      • 1 Reply to kwooozie
      • I am actually working on a write up for Hollywood Media. I will post it on my blog soon. Your analysis is pretty good.

        The way I value HOLL is this:

        Cash $10 million or $0.43 per share
        $8.5 million 5 year not - I value it at $8.5 million or $0.37
        $14 million earnout - I value it at $4 million or $0.17 per share
        $8 million earnout - I value it at $2.6 million or $0.11

        So far you get a total of $25.2 million or $1.09

        Then you get MovieTickets.com. You are absolutely right that trends are solid due to an increasing adoption of online movie ticketing. Plus Fandango's deal with Lowes is expiring, I believe, in April 2011. Also don't forget international expansion. Read some of the press releases on MovieTickets.com and you will find out how much they are growing internationally (Spain, Argentina, Canada, Bermuda). The majority of this growth is new and not reflected in 2009 numbers. This is just getting started.

        I put a value of $50 million on HOLL's stake in MovieTickets.com which is $2.09. You are right that the CEO is incentivized to sell because he gets 10 percent of the proceeds. Also when I talked to him he mentioned monetizing MovieTickets.com. He needs the money for a different deal and not he is not getting a salary so selling MovieTickets.com would help him out a lot.

        So now you have over $3 per share of value.

        However I am still having a hard time figuring out how to treat the $8 million in liabilities most of which are accrued expenses. If anyone can comment on this I would appreciate.

        I also looked at some other businesses that you listed such as CinemasOnline and book-publishing business but I didn't try to value them. It would be nice if we could get a few million dollars for them.

 
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