Is Discovery Inc. (DISCA) A Smart Long-Term Buy?

Smead Capital Management, an investment management firm, published its “Smead Value Fund” fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 12.48% was recorded by the fund in the fourth quarter of 2020, below its Russell 1000 benchmark that delivered a 14.7% return, but above the S&P 500 Index which had a gain of 12.15% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Smead Capital Management, in their Q4 2020 investor letter, mentioned Discovery, Inc. (NASDAQ: DISCA) and emphasized their views on the company. Discovery, Inc. is a New York-based mass media factual television company that currently has an $18.2 billion market capitalization. Since the beginning of the year, DISCA delivered a 37.02% return, impressively extending its 12-month gains to 106.05%. As of March 29, 2021, the stock closed at $41.23 per share.

Here is what Smead Capital Management has to say about Discovery, Inc. in their Q4 2020 investor letter:

“For the fourth quarter, Discovery Inc. (DISCA) led our gainers. Discovery woke up in anticipation of starting their streaming business. Their cable shows are wildly popular, and their international footprint is real.”

Our calculations show that Discovery, Inc. (NASDAQ: DISCA) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Discovery, Inc. was in 28 hedge fund portfolios, compared to 29 funds in the third quarter. DISCA delivered a 40.00% return in the past 3 months.