Should You Be Tempted To ‘Sell’ Discovery (DISCA) Stock
Bretton Fund recently released its Q4 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 11.52% for the quarter, underperforming its benchmark, the S&P 500 Index which returned 12.15% in the same quarter. You should check out Brown Capital Management's top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, the fund highlighted a few stocks and Discovery Inc. (NASDAQ:DISCA) is one of them. Discovery Inc. (NASDAQ:DISCA) is a mass media company. In the last three months, Discovery Inc. (NASDAQ:DISCA) stock gained 115% and on March 2nd it had a closing price of $59.24. Here is what the fund said:
"We parted with Discovery Communications in the fourth quarter. We were originally attracted to its loyal fan base, high cash flows, and cheap stock. While Discovery retains those attributes, we’ve become less optimistic that Discovery will find a home in the new media ecosystem as lucrative as its old one. As people cut the cable cord, they are re-bundling content from various providers like Netflix and Disney, but media companies without enough “must have” content risk being left behind. Discovery recently launched its own streaming service, discovery+, but people only want to subscribe to so many services. By last quarter, it was only a 2% position, but it was still a drag on our returns. We recognized a loss of 36.6% on the investment, -9.3% on an annualized basis."
In January, we published an article revealing that Silver Ring Value Partners is bullish on Discovery Inc. (NASDAQ:DISCA) stock.
In Q2 2020, the number of bullish hedge fund positions on Discovery Inc. (NASDAQ:DISCA) stock decreased by about 9% from the previous quarter (see the chart here), so a number of other hedge fund managers don't believe in Discovery's growth potential. Our calculations showed that Discovery Inc. (NASDAQ:DISCA) isn't ranked among the 30 most popular stocks among hedge funds.
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Disclosure: None. This article is originally published at Insider Monkey.
