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Is Discovery Inc. (DISCA) A Great Long-Term Investment?

·2 min read

Artisan Partners, a high value-added investment management firm, published its “Artisan Value Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A return of -1.33% was recorded by its Investor Class: ARTLX, -1.28% by both its Advisor Class: APDLX, and Institutional Class: APHLX for the third quarter of 2021, all below the Russell 1000® Value Index that delivered a -0.78% return, and the Russell 1000® Index that gained 0.21% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Artisan Value Fund, in its Q3 2021 investor letter, mentioned Discovery, Inc. (NASDAQ: DISCA) and discussed its stance on the firm. Discovery, Inc. is a New York, New York-based mass media company with a $12.1 billion market capitalization. DISCA delivered a -18.91% return since the beginning of the year, while its 12-month returns are down by -15.28%. The stock closed at $24.40 per share on December 06, 2021.

Here is what Artisan Value Fund has to say about Discovery, Inc. in its Q3 2021 investor letter:

"Discovery is a media company that distributes content across US and international networks, such as HGTV, Discovery, TLC, Food Network and Animal Planet, among others, as well as its streaming service Discovery+. The company’s large collection of lower budget, unscripted programming is highly popular. The company has three share classes. We hold the C share, which doesn’t have voting rights and trades at a discount to the A and B share classes with voting rights, but all three will be treated equally when collapsed into a single class in the planned merger with WarnerMedia. The merger— slated to close in Q2 2022—will combine Discovery’s content with WarnerMedia’s HBO, potentially making it the third-largest streaming company behind Netflix and Disney. We like the outlook of this merger as the new combined entity will have a good mix of content that should attract viewers. Discovery has already had significant success with rolling out Discovery+ as it had better than expected subscribership. Further, Discovery’s shares are priced as a legacy media asset in decline, but we see significant upside given how the market values Netflix and Disney. However, we sized the position on the smaller end given the risks around integrating the businesses."

Based on our calculations, Discovery, Inc. (NASDAQ: DISCA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. DISCA was in 42 hedge fund portfolios at the end of the third quarter of 2021, compared to 44 funds in the previous quarter. Discovery, Inc. (NASDAQ: DISCA) delivered a -13.81% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.