The markets are gyrating, brokers are churning their most aggressive accounts — and we’ve been steadily following our playbook to avoid big losses and catch some big upside moves in our Revolution Investing names. One of the most important aspects of making big money in the markets over time is to be patient and allow the pitches to come to us. I often remind you guys not to force trades and I am practicing it in front of you presently. I’ve got a couple new longs and a couple new shorts on my radar, as always, but I won’t force anything until we find a good risk/reward opportunity to pull the trigger on.
The Internet Video Revolution is finally hitting its full stride and it’s just about right on time. People think of Netflix, Amazon, Apple, Google (and privately-held Hulu) when they think of the best ways to invest in this revolution.
For more than ten years, I’ve highlighted those names as the best ways to play this revolution and last year, I added Sony to the Revolution Investing portfolio too. And in fact, Sony is probably the best way to invest in the Internet Video Revolution right here, right now — because of its library of TV shows and movies.
The four publicly-traded companies that I mentioned above, all want to become the dominant streaming Internet TV/app de facto standards. Collectively, they are worth $1.25 trillion dollars in market cap valuation and they have more than $250 billion in cash on their balance sheets to spend in their efforts to become the dominant streaming Internet TV/app platforms.
I’ve owned Apple for 12 years this month, and Google since its IPO. I’ve owned Amazon in years past but sold it recently in part because they are in a spending war for Internet video.
Readers of mine will not be surprised by the reports out this morning that Sony’s getting bids of up to $1 million per episode for the streaming rights for Seinfeld. I’ve highlighted Seinfeld specifically in my analysis explaining why I loaded up on Sony back in the teens and why I continue to hold it now.
Sony’s likely to pocket some extremely high gross margin revenue from selling the 180 episodes of Seinfeld for $150-200 million or so. This is just the tip of the iceberg as Sony moves to monetize this library of content that now has a bidding war going on for it. As I’d noted when we bought Sony in September last year:
“Click on this link and surf around at the hidden value that is Sony Pictures.
In the Sony Pictures catalog, you’ll find new hits like The Black List or Masters of Sex plus Seinfeld, King of Queens and hundreds of other hit TV shows. Movies in the Sony Pictures catalog includes little flicks like The Equalizer with that guy Denzel Washington, Spider-Man, Ghostbusters, and endless other movies.”
While most of those shows won’t garner the hundreds of millions of dollars in revenue that Seinfeld is here, some will. And all of the content in the Sony Pictures library is likely to be turned into a trillion dollars of revenue over the next seven or ten years or so.
Sony’s down 3% today, despite this Seinfeld news confirming the value of the Sony Picture library is being undervalued with the Sony stock currently worth $30 billion — or 3% of the trillion dollars of revenue I expect for this one division over the next seven to ten years. Long-term investors might want to look at scaling into this one on the weakness.
And don’t forget about Sony’s other catalysts, including the collapsing Yen, wearables, Project Morpheus virtual reality, the growing automotive sensor business, and the Walkman (just kidding about that one).