I started analysing AT&T and then stumbled upon the reason Burry is investing in Discovery.
Here’s an excerpt:
Warner Media should be worth at least ~$100Bn. AT&T will only own 71% of spin-off
$100Bn(0.71) + 130Bn = $200Bn. AT&T current market cap = $180Bn…Not a HUGE discrepancy, but it’s undervalued using extremely conservative estimates.
I would like to see AT&T trade a little cheaper to increase my margin of safety before I add a concentrated position.
Through my analysis, I was led to Discovery. Discovery will own 29% of the NewCo after the merger. If Warner Media is worth $100Bn, then 29% is worth $29Bn. Discovery is currently trading at $12.44Bn. Now there looks to be a margin of safety worth investing in, especially because I want the upside that HBO Max will offer.
I have already started looking into Discovery and will post on it when I understand it properly.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.