This is due to a broader shift in investor sentiments towards consumer stocks.
However, this is a great business for the longer term. At least, till the growth continues.
- A great business requires very little capital to pursue its growth. Tips has a very high RoE and RoCE.
- The company is prudent about capital allocation. They do not unnecessarily reinvest in business and believe in returning the extra cash to investors.
- This company is decreasing the number of shares outstanding through buybacks. Typically, companies do the opposite and dilute equity.
I will refrain from commenting on the present valuations. They can correct also. But for a long-term investor, this is a great business to hold.
Globally, the music label business is getting investor attention. 2 years back, Bill Ackman took a significant stake in UMG. Also, select global PE firms are buying music libraries, because they act as an annuity.
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