Warner Brothers Discovery – More Shares Please

On Friday the 25th, the Value Investment Fund proceeded to purchase another 3,000 shares of Warner Brothers Discovery.  The market price at time of purchase was $7.75 per share and the transaction fee per share is 25 cents. Thus, the Fund invested $24,000 even to own 3,000 more shares bringing the total ownership position to 4,300 shares to date. 

Total basis in the 4,300 shares is now $35,932. 

This particular stock is currently trading at less than $8/Share. It peaked at $51/Share back in April of 2021. The key is that its current book value is $14/Share and the cash flow from operations per share over the last 18 months is $3.80 per share. What is driving the financial loss on the income statement over the last three years are the write-down of the goodwill and other amortizable intangibles. At some point, this company is going to start showing positive quarterly results. When it does, the stock price is going to soar and if it can do it four quarters in a row, it is possible the stock price will double in value and keep rising. 

The Fund’s current sale price is $25/share and anticipates it will take 30 months to get there. But when it does, it will generate $71,000 of profit or an annualized return greater than 40% per year. Act on Knowledge.