One-Hour Analysis of Live Nation

We like to use Value Line as a weekly source of potential ideas. Since we are value investors, some might find it strange that we would use a publication whose ranking system is based mostly on price and earnings momentum as a primary source of idea generation. Perhaps in the future we will take a look at track record of their ranking system and similar ones like Zack’s and review the literature on adding a momentum component to value investing. But back to how we use Value Line as an idea sourcing tool.   Every week Value Line publishes an issue that contains roughly 130 stocks in it grouped by industry. This gives us a chance to quickly review the latest results and financial metrics on 6 or so industries a week. It also puts in front of us hundreds of companies we might never even think about or come across using other methods.

One such company that popped out of a recent Value Line issue we decided to revisit was Live Nation. While at Behind the Numbers we originally wrote up the company as a short. We were concerned with the high leverage, the aggressive rollup strategy, governance issues and long-term growth rate assumptions amongst other things.  Since then, LYV has merged with Ticketmaster, signed a mega deal with Madonna and now have John Malone and Liberty Media as large shareholders.  We decided to take another look at LYV to see if it has any investment merits either long or short. Here is how I started my “One hour analysis” of LYV. [Read more…]