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마이클 버리가 매수한 MGM리조츠와 워너브라더스 디스커버리(WBD)를 분석. MGM은 마카오 매출 회복(방문객 130만명, 2019년 대비 약 99%), 잉여현금흐름 13억달러 이상 전망, 시가총액/FCF 약 10배로 적정~약간 저평가로 판단. WBD는 매출 정체 속 수익성 개선(조정 EBITDA 흑자전환, 부채 510억→430억달러), 잉여현금흐름 53억달러 전망, 시총/FCF 약 5배로 고위험·고수익으로 평가. 버리 추종 맹목적 매수는 경계.
다듬은 글
13 FS came out not long ago and I always try to analyze them to find potential buying opportunities in the stock market I haven't found anything as of late but the last one which was very successful one that I found was in 2022 I shared it on YouTube it was TPL Texas specific land I've never heard of it and I saw a fund buying into it I researched it bought it made 40% in I think three months in early 2022 and since then I haven't had much luck in terms of certain apps but in this video I have michaelb I'm gonna discuss two stocks that he bought and I think both of these stocks are trading at fair value one of them is more on the undervalued side and they are still better than nothing in this overvalued market where it's very hard to find value or very hard to find amazing companies trading at a fair value or fair price or a little bit on undervalued side so I really believe you guys are going to enjoy this video now I have to say Michael buy is the hardest person to clone so if you're you're more of a cloner you tend to clone war Buffett or someone like that don't try to do that with Michael B he could already be out of these Investments this is why I do this videos so we can have our own thesis not just go follow him blindly and then lose 20 or 30% when he could have been sold all right now the first stock that he bought which is very interesting to me and I think it's trading at fair value this is a company called MGM MGM resource International the stock has been on a recent run lately since September it has gone down a little bit before on earnings now it's tring around $42 per share the same price it was trading at in around 2023 so MGM resource most of you know the company they own many casinos resource properties all around the world over 18 of them in the United States they own some in Europe they own some in maau they own some in Japan and pretty much all over the place very popular place and most of you know this companies they own many different brands also in terms of the Las Vegas operation we had the Formula 1 here in Las Vegas this year and they posted pretty good numbers as of late revenues was up around 5% eidar was up 2% margin declined a little bit from higher inflationary costs a lot of it is due to Staffing and tight labor market and stuff but they did decline in terms of margins but everything else has been improving in terms of MGM China and this is what you have to focus on because they're still somewhat recovering to pre- pandemic level and they did recover to preand mic level I'm going to talk about it in a little bit but the MGM China numbers are extremely impressive over 9% Revenue grow 18% eidar grow and margin expansion of 220 basis points and this is what has driven a lot of the growth lately and I think it's going to continue in terms of China if you look at the latest numbers over 1.3 million visitors entered maau during the 8 day Lunar New Year which is I think the Chinese New Year which ran between February 10th and 17th so around 7 days over 1.3 million visitors and they said that they pretty much almost 99% comparable to pre pandemic of 2019 so they're now finally covering to their 2019 kind of levels and this is the opportunity you have with with MGM MGM has over a 15% market share right now in China and I think it's eventually going to grow in the future they have pretty amazing property over there and a pretty good reputation I think now in terms of the Super Bowl we know what happened a lot of people were better on the Super Bowl I think it's reached pretty close to $23 billion and as you know MGM has a piece of it they have something called MGM B and they have another one I forgot what it was called but MGM bat still has a pretty decent market share I around 23 24% in the United States uh it's losing market share to other competitors most likely DraftKings and the other one but I bet MGM still has you know pretty good market share and at least it's a part of something bigger cuz these other companies like DraftKings they don't really have life casinos and all these profitable stuff that MGM has and this is why if I had to battle on something with sports I would bet on a platform that they have physical casinos they have this free cash flow machine and they also have the sports ping business kind of like MGM had which I like very very much in terms of the balance sheet normally whenever you see a lot of the casino operators Hotel companies and stuff they tend to have a lot of that this is not the case with MGM they have pretty close to $3 billion in cash and cash equivalent long-term debt is 6.3 billion so this is pretty close to a$3 billion in terms of net debt which I don't believe is too high for a company like MGM especially for the kind of free cash flow that they're putting up and they're also buying back a lot of stock lately which is something that I like especially after what happened in after 2020 the stock has suffered for some time has recently recovered but it's still much slower than what it used to be in terms of evaluation metric which MGM right now is trading at only 10 times free cash flow or pretty close to a 10% free cash flow yield now this is a company that's still improving it's still recovering in maau amazing property and high growth over there you have bet MGM which yes is losing market share but it's still somewhat growing this is a rapidly growing market and you have the US operations and they have pretty good Monopoly in these kind of markets so for me personally looking at MGM at 10 times free cash flow and was a good balance sheet that have I don't think this is too expensive for this company you should trade at 15 times average market cap to free cash flow and I was only trading at 10 times free cash flow or a 10% free cash flow yield for a company that's expected to keep increasing the free cash flow in the future over 1.3 billion for 2024 and pretty close to 1.5 billion in 2025 so over the next few years we know that this free cap is sustainable and MGM is likely going to use it to keep buying back you know stock buying back a large percentage of of the market cap like they've been doing it's been pretty close to 15% of the market cap 13% of the market cap lately and I would expect this to continue maybe they could buy back another 10% in 2024 using the free cash flow or if they want to pay down some debt but they do have pretty good free cash flow profile and for the company I think this is why Michael B bought it I think this is a stock that's not extremely undervalued it's not overvalued it's not a bargain but it's more of a good company trading at a fair value or a little bit on undervalued side and relative to other opportunities in the market I think MGM Resorts make sense and I prefer MGM over wind Resorts I mean I checked out win many times and I just cannot understand why this company is so much more expensive than MGM maybe because they own their own real estate and MGM has some leaseback kind of thing with VC properties and many others but again I mean MGM is a good company I think it's a pretty good company trading at a fair price now the second stock is a little bit more on on the valued side for value investors and this is a stock I talked about many times and most of you are familiar with it and this is a stock called wbd which is Warner Brothers Discovery over 4 and a half% of his portfolio wbd has been an absolute disaster it keeps going up and then people celebrate and makes new lows and it's it's been frustrating for shareholders I used to be a shareholder myself I sold around $1350 cents like in 2022 and I bought Google back then and I suffered a 27% loss buying when it when it was Discovery even before the merger and then the merger happened and then they had the pro fora numbers that didn't play out and I you guys most of you know my story with this company it's my biggest loss over the last four or five years pretty much so Warner buzzer Discovery we're not good friends with this company and it just keeps making new lows $9.83 and it's it's been crazy even though the business itself is starting to improve but I believe the market was expecting a little bit more growth in Revenue and for me personally I don't think this is what investors should be focused on Revenue growth is important of course but I think wbd can return a pretty decent return without them having to even if revenues is flat or slightly declining or slightly increasing I still believe wbd can return you know fantastic kind of upside potential over the next few years and this is mainly because they are not focusing on just growing at any price they are focusing on profitable growth within the streaming space and within the movie space within the theatrical and everything that they're trying to do as you could see revenues was pretty much flat up 1% adjusted e is up 22% free cash flow was negative -200 million which was not accurate they had a lot of onetime expenses when they merged but now it's 2.1 billion for Q3 of 2023 DTC profitability this is what they're focused on if you look at the total DTC subscribers they went down around 700 million so they decreased in subscribers while something like Netflix is increasing and this is bad but the same thing is happening to Disney and the same thing is happening with wner Brothers Discovery I think they are not focused on gaining as many subscribers as possible but they are more focused on profitable growth even if it's slow even if they have to CH and lose a little bit of subscribers for a while until they get on the right sustainable path of adding the right subscribers at the right price and focus on profitable growth which I think is more important than just growth at any price and you know arpu is still up around 6% adjusted iida was a loss of 600 million and now it's positive net of 100 million and this is a massive massive Improvement it led to some losses in subscribers of course but this is just the cost for wbd to be profitable they had to increase prices and do many different things e trend has been massively improving from a loss of 734 million to a net gain of 545 million I mean as you could see it's not much about Revenue growth it's more about profitability and using the free cash flow to pay down as fast as possible as much debt as possible as quick as possible this is the whole thesis because the company has a lot of interest expense and interest expense for this company is pretty close to $574 million a quarter which is around 2.1 to $2.2 billion every single year in just interest expense so this is why I believe wbd does not need to grow revenue for you to get paid as a shareholder the massive value Creations for shareholders is going to come from that pay down and the company still has around 45 billion of gross debt so thatt has been coming down it went from 51 billion to 43 billion and they are focused on the leveraging and paying down the debt as fast as possible and I think the the company can continue to do that with a free cash flow expected 5.3 billion in 2023 and over 60% Conor it over the long term I'm not sure what this could lead to I'm not going to try to guess but 5.3 billion of you know free cash flow every single year is more than enough to pay the near term maturities which is around $9 billion1 19% $9 billion is due over the next three years but over 5 billion of yearly free cash flow is more than enough for Warner brother's Discovery to quickly deleverage and pay down the debt which most of it is fixed at 4.6% interest rate so I really like what I'm seeing over here and if you do use the free cash flow number of 5.3 billion the market cap right now it's only $24 billion so this company is trading pretty close to five times free cash flow which is dirt cheap but we cannot really use market cap to free cash flow because they have so much debt if you put it on an Enterprise Value to free cash flow it's around 13 times Enterprise Value to free cash flow which is not cheap but it's not expensive either in my opinion for a company with the kind of mode that they have with the kind of content at libraries that they have with the kind of value creation they can create if they decide to sell some assets they did sell a little bit of assets but they could do even more in the future and I do have a partnership around Sports I think with Disney and and and some other company I forgot what it was and it's it's pretty promising stuff so around 13 times free cash flow 5.3 billion if they pay down the debt the free cash flow could be up to 7 7 and a half billion and I think it's ultimately going to get there even though they don't really Del leverage as quick as possible but the main return that shareholders should be looking for is the 5.3 billion of free cash flow which is likely gonna keep growing into the future and if they can keep growing it into the future they can potentially create even more value for shareholders they have a 60% conversion rate over the long term now if they do sustain around 11 billion over the next few years this is pretty close to a $7 billion free cash flow number without them having to without factoring in interest expense coming down which increases free cash flow so I really like what I'm seeing over here it's very hard to calculate the exact return for Warner bu's Discovery or intrinsic value numbers or whatever because it's hard to know how much debt they going to pay down what kind of things they're going to do with the free cash flow but again what the compan is doing what the co is doing seems to be working in profitability not much on Direct consumer user growth and not much on Revenue growth and I think the market is focused on the wrong thing and eventually when debt starts coming down interest expans starts coming down free cash flow increases and once that start coming down then they can return value to shareholders through BuyBacks and do dividends now the company could buy back stock I'm sure the stock would not be sitting at $9 but they can't really do much because of the 9.3 billion that's du over the next three years so a lot of this could change if you a long-term investor and I think this is why Michael B bought wbd and this is why he bought MGM MGM is a little bit safer wbd has higher risk but also higher reward and it was not Financial advice it was just my opinion on these two companies I really hope you enjoyed the video so if you did please press the like button and maybe consider subscribing so I hope to see you in another video
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