As noted above, DreamWorks (DWA, Financial) (+60%; +5.0%), the film studio and multimedia company, was the Fund’s largest holding and drove much of the return in the quarter, when Comcast announced an all cash acquisition for $41 per share. As our discipline dictates, we sold our stake when the price rose to our appraisal. DreamWorks was the kind of opportunity Southeastern hopes to find— a company with high quality, stable assets but volatile earnings being mispriced in a period when the market is rewarding companies with more predictable earnings and high dividend yields. We started buying DreamWorks in the third quarter of 2014 at $19 following disappointing new movie releases. Our appraisal hinged on the valuable film library and DreamWorks’ growing success in TV and web content as well as licensing. We partnered with a strong board and owner-operator CEO, who built the company’s brands, developed a presence in China, managed costs, and ultimately monetized the company at full value.
From Southeastern Asset Management's Small-Cap Fund second quarter 2016 commentary.
