Stocks

The Man at the Helm of Disney

By John Del Vecchio  |  November 18, 2019

Warren Buffett once said, “I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.” That’s great advice.

But there’s one company out there though that is far from being run by an idiot.

It’s a worldwide brand with exceptional financial performance. The stock has been on fire.

That company is the Walt Disney Company (NYSE: DIS).

The man at the helm is Bob Iger.

Disney has been a Hidden Fortunes recommendation since earlier this year.

At that time, Disney was one of the worst-performing stocks in the Dow.

But now Sleeping Beauty has awakened and the stock is breaking out of its long slumber.

This past weekend, I spent some time digging a little deeper into the company and Iger himself. He’s been CEO for about 14 years and done some major deals. Those include Pixar, Marvel, and Fox.

The animation studio is at the top of its game.

The company is setting box office records.

The introduction of Disney+ gives the company a huge advantage in the streaming market due to its library of content.

That content will grow.

The Cost of Creation

Content creation is expensive.

Just look at the other companies in the space. They spend tens of billions of dollars on content and still bleed cash flow. But Disney has a huge edge here.

Iger recently released a book, The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company. As far as business books go, it’s a breezy read. He discusses some of his major deals and leadership style in an accessible way.

In the spirit of Disney, he does what the company does best — he tells stories.

Even better is his Masterclass session. I subscribe to Masterclass.

I joined because my next book after Unbounded Wealth is going to be a fictional thriller. Writers like James Patterson and Dan Brown give awesome writing seminars.

Oh, and there’s great chefs like Wolfgang Puck and Thomas Keller. Given that I love to cook, Masterclass has been awesome. I have no idea how they manage to recruit the caliber of talent, but they do somehow.

Over the course of a day and a half I watched Iger’s seminar on business leadership. He’s cool, calm, and collected. He has wonderful perspective about work and family. And he is a calculated risk-taker.

It was enlightening.

I also walked away thinking that Disney is nowhere near being run by an idiot.

The next CEO might be a total bozo. That could be a problem. But Iger has two more years left at his post.

He’s going to go out with a bang. Shareholders are in a good spot right now.

The Data Behind Disney

My Forensic Accounting Stock Tracker Software (FAST) rated Disney a “buy” when Hidden Fortunes bought it at that tail end of its sideways stock action.

Here’s a few of the key data points from that recommendation…

Revenue Recognition — A: It doesn’t get any better than this. The company has no risk of over-inflated revenue or a manipulated top-line.

Cash Flow Quality — A: Disney has strong cash flows and cash flow return on invested capital. In addition, the company’s owners’ earnings have exploded in recent years. This affords management a lot of flexibility.

Earnings Quality — A: Disney is not an earnings manipulator. While earnings quality fluctuates from year-to-year, it has been persistently good over the last several years.

Valuation — B: There is upside to Disney stock from here based on current fundamentals. However, it’s not as undervalued as it was when Hidden Fortunes recommended the company prior to its recent big run-up in share price.

Expectations — C: Expectations have started to moderate and are now neutral. The recent quarterly performance was relatively strong. Investors have ramped up their optimism. Management will have to pull a new rabbit out of its hat after Disney+ to propel expectations higher.

Shareholder Yield — B: Disney has bought back shares aggressively. The dividend has fluctuated in recent years, which has lowered its score.

While Disney has had a big move, there’s plenty of stocks with potential in Hidden Fortunes.

If you’re looking for something less mainstream, there’s another opportunity for you.

I have been negative on the IPO space.

But the November issue of Hidden Fortunes recommends and under-the-radar stock that just went public with the potential for 1,000% gains or more.

Not a subscriber? No problem. Click here to check out Hidden Fortunes, risk-free.

P.S. If you haven’t signed up yet… my colleague, Adam O’Dell, is holding a live webinar tomorrow at 1 PM ET, where he’ll reveal his innovative timing strategy that has earned an average of 46% gains on every trade recommendation. You can sign up for free here!

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John Del Vecchio

John Del Vecchio is the author of the bestselling book, Rule of 72: Compound Your Money and Uncover Hidden Stock Profits and What’s Behind The Numbers: A Guide To Exposing Financial Chicanery And Avoiding Huge Losses In Your Portfolio.

As the in-house stock market guru and forensic accountant for Dent Research, John stood on the shoulders of the great David Tice, James O’Shaughnessy and Dr. Howard Schilit, and built a framework of algorithms and a multi-factor grading system that has made him one of the more successful short-sellers around.

John is also the executive editor of our Hidden Fortunes newsletter and our trading service Small Cap All-Stars.

He graduated Summa Cum Laude from Bryant College with a B.S. in Finance and was awarded Beta Gamma Sigma honors. He earned the right to use the Chartered Financial Analyst designation in September 2001.MORE FROM AUTHOR