Hotchkis & Wiley, an independent investment firm, increased its position in Discovery Communications Inc. Class A (DISCA, Financial) by 50.02% as the company increased revenues and operating income during the first half of 2016.
The firm initially purchased 3,888,600 shares of Discovery Communications at an average price of $31.39 during the first quarter of 2015. Throughout 2015, Hotchkis and Wiley raised their position to 9,875,281 shares, finishing the first quarter of 2016 with 10,347,018 shares. As of June 30, the independent firm owned 15,522,485 shares of Discovery Communications after purchasing 5,175,467 shares at an average price of $25.23.
A firm driven by value
Founded in 1980, Hotchkis and Wiley provides value equity strategies to find undervalued companies with growth potential. The firm’s investment approach consists of four characteristics: focused on value, driven by research, well-defined process and long-term results. Research, according to their investment team, allows the firm to choose companies with high long-term value potential.
By looking at the long-term view of companies, the investment firm gets deep insights on the companies’ true economics and important long-term value drivers including normal earnings power, business sustainability, balance sheet strength and management use of capital. Hotchkis and Wiley collaborates with top management and researches potential risks of companies. With this research, the firm estimates the true value of companies and makes investing decisions based on these values.
Media company increases operating revenues
Founded in 2008, Discovery Communications provides educational content globally, through platforms including the Discovery Channel, Animal Planet and Investigation Discovery. The media company strives to maximize customer viewership and subscriber volume by offering an eclectic variety of content genres. According to the company’s recent 10-Q filing, Discovery Channel increased its revenues during the first quarter of 2016 by 6% compared to revenues for the first three months of 2015. Although the per share revenue growth declined over the past two years, the media firm’s three-year revenue growth still outperforms 88% of global media – diversified companies.
Additionally, Discovery Channel generally had high operating margins, suggesting upside value potential. While the company’s operating margin slightly contracted during the past three years, Discovery Channel’s operating margin outperforms 93% of global media – diversified companies. Additionally, the media company’s high gross margin implies durable competitive advantage and a sustainable business operation.
Hotchkis and Wiley have the highest ownership of Discovery Channel’s stock with 3.83% of shares outstanding. The independent firm and two other gurus increased their positions in the media company during the first half of 2016. Mario Gabelli (Trades, Portfolio), who currently owns 2,276,656 shares, increased his Discovery Channel position by 11.54% while Joel Greenblatt (Trades, Portfolio) increased his position by 36.73%.
See also
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Disclaimer: I currently do not own Discovery Channel.
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