Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Will AMC’s Second Courtship Of Starz Lead To Another Media Merger, Or More Broken Hearts?

Page 1 of 2

Shares of Starz (NASDAQ:STRZA) are trading 7.91% higher in the extended-trading session after rumors surfaced of acquisition discussions between it and AMC Networks Inc (NASDAQ:AMCX), as reported by Bloomberg. Let’s find out more about the discussions and uncover hedge funds’ sentiment towards such a deal.

Most Expensive Televisions in the World

According to the latest reports, AMC Entertainment is said to be in discussions with Starz to acquire the company and this isn’t the first time that AMC has shown interest in it. AMC Networks Inc (NASDAQ:AMCX) backed out from even making a bid for Starz in December of last year, considering the latter to be overvalued at $4 billion at that time. It will be interesting to see how these discussions unfold, as Starz is said to have an enterprise value of $5 billion, along with a market cap that currently sits at $3.9 billion. Shares of the entertainment media company are up by more than 30% this year.

John Malone is the largest shareholder of Starz (NASDAQ:STRZA) and the billionaire investor has talked on multiple occasions about the acquisition talks involving the company, the latest of which involved Lions Gate Entertainment Corp. (USA) (NYSE:LGF). The billionaire investor was able to get a 3.4% stake in Lions Gate Entertainment against an undisclosed stake given to the entertainment company in Starz, and he called a deal between the two a “terrific, synergistic fit”. There wasn’t any official confirmation from either AMC Entertainment Holdings or Starz concerning the merger discussions.

The smart money was slightly bearish on Starz during the second quarter. The aggregate hedge fund holdings in the entertainment company were only up by 15.27% to $825.89 million in spite of a gain of 29.96% in its share price during the quarter, which indicates a sell-off from hedge funds in our database, though the number of hedge funds holding long positions in the company was up by two to 27. Hedge funds in our database owned 18.1% of its outstanding shares on June 30.

An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a top healthcare fund with the knowledge and resources of Orbimed Advisors or Baker Bros. Advisors can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 60 percentage points and returning 118%, while hedge funds themselves have collectively underperformed the market (read the details here).

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!