Sold Warner Bros. Discovery
Today, September 11, 2025, Paramount Skydance indicated a desire to purchase all of Warner Bros. Discovery. The offer will be made within a month. The stock price soared from $13 a share to almost $17 a share early in the afternoon. This site’s facilitator did not have a sell directive and was alerted to the dramatic change by his son. The Value Investment Fund sold at 2:11 PM as the price was dropping from $17.12 per share.
Overall basis in the 4,300 shares was $35,932, inclusive of transaction fees. Total generated revenue from the sale was $71,380. Transaction fees were $1,075 (25 cents per share). The net proceeds totaled $70,305. The following is the complete report:
Sold 4,300 Shares of WBD at $16.60 Each $71,380.00
Transaction Fees to Dispose at 25 cents Each 1,075.00
Net Proceeds From Sale $70,305.00
Basis:
. 1st Tranche 03/07/24, 300 Shares 2,622.00 *$8.62/SH including transaction fees
. 2nd Tranche 03/15/24 1,000 Shares 9,310.00 *9.06/SH including transaction fees
. 3rd Tranche 02/25/25 3,000 Shares 24,000.00 *$8.00/SH including transaction fees
. Subtotal Basis $35,932.00 *$8.36/SH average basis
Weighted Average Holding Period 381 Days
Gain on Sale of WBD $34,373.00
Average Earnings/Day $90.217
Average Earnings/YR $32,929.51
Basis $35,932.00
Annualized Interest Rate 91.64%
This particular Value Investment Fund’s return on investment is 91.64% annualized.
The key driving factor of value was the fact that this company’s market value was well below its intrinsic value, determined to be greater than $14 per share, and its book value was $18 per share. Paramount Skydance has determined this company, which aligns with its entertainment model, to be a good addition to its overall operations. The Value Investment Fund’s original goal was to sell at $25 per share; however, there is a churning opportunity available to the Fund, and thus, the facilitator took advantage of the opportunity and sold at $16.60 per share. On Friday, the 12th of September, the market price ended the day at $18.87 per share.
Warner Bros. Discovery – Adherence to Principles
When the Value Investment Fund made its initial investment into Warner Bros. Discovery in early March of 2024, it had the following price points:
- Book Value $18
- Intrinsic Value $16
- Buy Price <$10
- Sell Price >$25
- Expected Turnover 3 Years
This site advocates four principles of value investing. First, risk reduction is conducted through adherence to only purchasing the top 2,000 companies that have solid revenues, good margins, and effective management. Warner Bros. Discovery met all these requirements; the discount factors used to determine intrinsic value and the buy price were affected by the high debt position the company carried on the balance sheet, but, other than this risk issue, the company was solid. It was experiencing the cost of learning how streaming works as all the entertainment conglomerates (Disney, Paramount, Netflix) were learning.
Secondly, calculate a fair and reasonable intrinsic value. Here, the Fund Facilitator calculated $16 per share, which is less than book value. This is rare for a top 2,000 company. This is due to the debt situation of Warner Bros. Discovery. At the end of 2023, Warner Bros. Discovery owed $42 billion in long-term debt. The problem is that the nontangible asset value for Warner Bros. Discovery was $49 billion out of the total of $123 billion in assets. By the end of June 2025, Warner Bros. Discovery reduced this debt position to $35 billion, and its nontangible asset portfolio was held at $46 billion. This, this debt-to-nontangible asset ratio improved dramatically in 1.5 years. Today, the intrinsic value for Warner Bros. Discovery is at least $18 per share.
Value Investing – Key Concept (Debt)
Debt is a risk factor when determining value. The stronger the debt ratio against tangible assets, the higher the risk involved and the requirement to utilize increased discount factors when determining intrinsic and buy values for securities. Ratios of more than 75% are considered the transition points for increasing discount rates at an ever-increasing rate. There are exceptions to the rule; strong cash flow operations such as REITs and fast-food restaurants allow for higher ratios. For example, McDonald’s has more debt than assets. Yet, its cash flow is so strong at $10 per share that the company can easily pay 60 cents on the dollar of earnings and still service its debt. McDonald’s is simply a gold nugget amongst debt-heavy companies. REITs have strong cash flows, allowing for payouts of dividends at 90 cents on the dollar of earnings (a requirement to maintain their tax-free status). Here’s a quick look at Warner Bros. Discovery’s long-term debt to tangible assets ratio at 06/30/25:
Total Assets $101.7 billion
Less: Intangible Assets (55.8 billion) *Includes Goodwill
Tangible Assets $45.9 billion
Long-Term Debt $34.6 billion
Long-Term Debt to Tangible Assets Ratio = 75.4 %
At the end of 2023, the ratio was 86%. This mandated a dramatic increase in the discount factor used to determine intrinsic and buy point values, i.e., it decreased both value points by an additional 20%.
Act on Knowledge.
The third principle is to calculate, via analysis, a good selling price. In early 2024, that stood at $25 per share. Today, it still stands at $25 per share. For those of you reading, back in March of 2021, it peaked at $58 per share, but this was a function of COVID. For about a year and a half back in 2013 – 2014, Warner Bros. Discovery hit the upper 30s/low 40s. But for a ten-year run, the price maintained a $25 valuation. This site’s Facilitator estimated three years to get back to that $25 price value.
Lastly, there is the fourth principle – patience. This is the most difficult of all four principles. This is a subjective requirement mandating mental discipline. When the price jumped suddenly to $16.60 on the 11th, the Facilitator had preset a minimum price level of $22 per share within two years of buying the investment. Paramount’s disclosure created the biggest single-day increase for Warner Bros. Discovery lifetime to date. The fear of missing out (FOMO) creeped in, and it was sold. The Facilitator can justify this in several ways by laying claim that Paramount could rescind its offer, the offer could be rejected or disapproved by the government, or possibly the offer will be less than $16 per share. This sudden increase in value was just too good to pass up, and the sale was put in motion. There are two other opportunities available in the market, and the risk factors for those two opportunities are far less than the remaining risk factors for Warner Bros. Discovery. Throw in the possible Paramount risks, and the adage of one in the hand is worth two in the bush comes into play.
The reality is this: the Facilitator took the money and is moving on. There are lots of good opportunities out there, and this particular investment worked out well. It’s a win, and the Value Investment Fund keeps moving forward. Act on Knowledge.