New Purchase. Am I Crazy??

New Buy

So folks am I crazy? As the picture about shows my latest purchase was Corus Entertainment. Corus has had a rough period of late as they struggle to get advertising dollars. There profits and revenues have been declining.

What is Corus Entertainment?

Corus Entertainment Inc. is a media and content company. The Company creates and delivers quality brands and content across platforms for audiences around the world. The Company’s portfolio of multimedia offerings encompasses 45 specialty television services, 39 radio stations, 15 conventional television stations, a global content business, digital assets, live events, children’s book publishing, animation software, technology and media services. Corus’ roster of premium brands includes Global Television, W Network, OWN: Oprah Winfrey Network Canada, HGTV Canada, Food Network Canada, HISTORY, Showcase, National Geographic Channel, Q107, CKNW, Fresh Radio, Disney Channel Canada, YTV and Nickelodeon Canada.

53a77-corus_logo2-sm

On Jan 10, 2018 Corus released their latest quarterly earnings and it was a disappointing one. Investors starting selling their stock immediately. I think the only bright spot in the earnings report was the fact the company was able to increase it’s free cash flow to $83.2m from $33.9m. Today as I write this the dividend has ballooned to 13.77% that is a shocking number and even I would say the dividend will probably be cut. The company has repeatedly said that it’s important to the company to leave the dividend as it is. Only time will tell what will happen.

Why Buy?

I bought the stock because I felt like the sell off of the stock was overblown. The stock started the day around 11.83, when I purchased it 11am the price was down to $9.62 so I was able to average down my costs.

Also another reason why is because I think the company can get themselves out of this mess. Now I admit I don’t have a clue how they will do it but I just have this feeling that they can.

The Purchase

On Jan 10th, 2018 I purchased 115 additional shares of Corus Entertainment @$9.62 a share. The cost of the purchase was  $1,116.29. This is the second purchase that I have made, previously I owned 69 shares. So now I have 184 shares. My average cost has dropped from $12.85 to $10.82 with this second purchase.

Income

Corus Entertainment currently pays a monthly dividend of $0.0950 for the time being. The additional 115 shares will provide me $10.92 per month and $131.04 annually.

Well folks what do you think? I know it is a little risky. Would you buy this company? Please feel free to leave a comment below.

Thanks

Matthew

14 thoughts on “New Purchase. Am I Crazy??

  1. If you believe in the company for the long-term, it definitely makes sense to average down and lock in that huge yield. Risks are obvious though and only time will tell. GL Matthew!

    Liked by 1 person

  2. Im a fan since they are a media powerhouse. I think the dividend will get cut but the market has probably factored that it. Id love to average down my price further but i think im going to wait til they cut the dividend and income investors get out, which might lower it more. Down 20-30% this yr, its a great value buy. Cashflow covers the dividend atleast!

    Liked by 1 person

  3. I don’t think you are crazy- but I do think this one may come back to bite you.

    One thing I’ve learned over the years is to not get caught chasing crazy yield…it usually results in dividend cuts and flat to dropping stock prices…just my 2 cents.

    That said – if they can somehow turn it around (and for your sake I hope they do) it could end up being a steal.
    Hope it works out for ya.

    Liked by 1 person

  4. I bought 100 shares from this company in January mainly because of them being one of the biggest if not the biggest entertainment company in Canada. I am not worried to much about a decrease in $10M CAD YOY because they still made over $457 CAD last quarter and increased their FCF to $83 CAD. As long as they continue to make a revenue around there and their net income stays stable I am not worried about a dividend cut. I believe management still has some work to do and hopefully will bring in my ad revenue this year while shaving off excess cost.

    Liked by 1 person

  5. Often good opportunities come when quality businesses have short-term issues – hopefully this is one of those times, but companies often fight until the very last second to sustain their dividends. BHP had a similar stance a couple of years ago, where they claimed they would NEVER cut the dividend, but the cash flow and market pressure unfortunately caught up with them. Turned out to be a pretty good buying opportunity though – the hard part is knowing if and when the stock price will turn! Good luck!

    Liked by 1 person

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