business newsMedia, Entertainment, and Communications Stocks Still Leading the Market Rally
By
Steve Birenberg
Sep 26, 2012 4:05 pm
Easy monetary policy in the US and Europe and confirmation of mostly good fundamental business trends leave investors bullish.
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September has been an interesting month for investors in entertainment and media stocks. The fall TV season began and Bank of America Merrill Lynch and Goldman Sachs hosted conferences. This year we also have a political season and quite a bit of macro news in Europe and the United States, highlighted by actions of the European Central Bank and the Federal Reserve.
My interpretation of the news flow for media and communications stocks was generally positive. Investors seemed to agree as almost all the entertainment stocks and many cable, telco, and satellite stocks have reached 52-week and multi-year highs in September. Some are making those highs today.
Besides a strong market at multi-year highs, I think the main driver of the upside in the shares has been the macro news. Conference presentations were generally bullish, but I found the tone to be somewhat cautious. The European Central Bank announced it would aggressively buy short-term debt of troubled sovereign nations. Without being named, Spain and Italy are the targets. Eliminating financing risk for these countries for several years reduces the downside from the sovereign debt crisis. Or at least it delays the downside. Less downside equals less risk which frees investors to take more risk and buy stocks with sensitivity to the global economy. Certainly, the big entertainment conglomerates qualify.
My interpretation of the news flow for media and communications stocks was generally positive. Investors seemed to agree as almost all the entertainment stocks and many cable, telco, and satellite stocks have reached 52-week and multi-year highs in September. Some are making those highs today.
Besides a strong market at multi-year highs, I think the main driver of the upside in the shares has been the macro news. Conference presentations were generally bullish, but I found the tone to be somewhat cautious. The European Central Bank announced it would aggressively buy short-term debt of troubled sovereign nations. Without being named, Spain and Italy are the targets. Eliminating financing risk for these countries for several years reduces the downside from the sovereign debt crisis. Or at least it delays the downside. Less downside equals less risk which frees investors to take more risk and buy stocks with sensitivity to the global economy. Certainly, the big entertainment conglomerates qualify.
No positions in stocks mentioned.
Entermedia is a long/short equity hedge fund focused on media, communications, and related technologies. Steve Birenberg is co-portfolio manager of Entermedia, owns a stake in the Funds’ investment management company, and has personal monies invested in the Funds. CBS and Discovery Communications are widely held by Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts. Steve is sole proprietor of Northlake, a long only registered investment advisor.
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Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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