Why I Like Lionsgate (LGF)
Obviously the big short term driver here is going to be the Hunger Games movie. I’ve been waiting for the stock to make a little pull back but it just doesn’t want to go down. I’m sure some of the success of the upcoming Hunger Games movie is being priced in and is the reason for the move up but I still think there is plenty of room to run, especially if it is a huge blockbuster like the Twilight movies.The economy may still not be recovering as fast as everyone would like but one thing is certain: the teens still have money to spend and will go out to see this movie.What else is great about LGF is that it isn’t a “one trick pony”. They have a pretty nice library of movies and television shows and are producing some great content right now. Just look at the Emmy award winning series Mad Men.I think what you are seeing right now with a company like Netflix is that content is king. Part of the reason for Netflix’s downfall is the realization that content is going to become more expensive. They are just the distribution channel. The real opportunity lies with the content owners like Lionsgate.
Full Disclosure
I finally bought the bullet and quit waiting for a pullback and bought about a 1/3 position in LGF this morning at $11.10. I also bought a few Jun 15 calls yesterday for 35 cents but only with a small amount of capital. Lionsgate reports earnings on Thursday February 9th after the close.I may add more LGF over the next two days as I imagine the conference call on Friday the 10th will be nothing but positive with the release of the Hunger Games coming up. I want a full position going into the movie release. This could end up being a longer term holding if all goes well especially with the possibility of more Hunger Games movies.
2/24/12 Update Sold half of my LGF June 15 calls. Bought at 35 cents and out at $1.05. Still holding the other half as well as all the stock bought at $11.10. Unfortunately I only bought a 1/3 position before earnings and didn’t get a chance to buy more.