Fox (NASDAQ:FOXA)’s shares declined during the quarter after the company announced stepped-up investments in cable content and a more restrained and opportunistic share repurchase. We think Fox is significantly undervalued, in part because of underappreciated businesses like Star, which provides nearly 25% of television content in India, and equity affiliates which include Fox’s 39% ownership of Sky, and non-controlling ownership stakes in Hulu and Endemol Shine. In total, we think Star, Sky and the other affiliate stakes could represent more than $10 per share of value while contributing only modestly to earnings. After adjusting for our appraisal of these underappreciated assets, we think the core of Fox trades for only 8-9 times earnings.
From Yacktman Focused Fund (Trades, Portfolio)s' third quarter 2016 commentary.
The views expressed represent the opinions of Yacktman Asset Management LP as of September 30, 2016, are not intended as a forecast or guarantee of future results, and are subject to change without notice.
