We are always told that share markets are ‘forward looking’ but...

We are always told that share markets are ‘forward looking’ but evidently no one seems to have the temperament to actually look forward with SWM even a short distance of time. (18 months)

The only way that current extremely cheap market prices of SWM represent fair value is if we are to presume that Australia will fall into an economic recession that we never get out of. It didn’t happen during the 1990’s recession, the dotcom bubble, the GFC or the Covid-19 Crash so why on earth would it make sense to bet against Australia now.

Week after week SWM grows its Total TV Market share and fundamentally improves its business. https://sevenwestmedia.com.au/assets/pdfs/Seven-Network-weekly-audience-report-Week-10-2024.pdf . Currently SWM is averaging close to 40% total tv national market share and this is before we get the digital rights to AFL and Cricket starting this October! This compares remarkably well to the 35.5% total tv market share SWM was managing to achieve during the covid-19 downturn and means that SWM is right back at its historical average of 40% market share.

Why does this improved market share matter? SWM estimates that each 1% is worth an additional $34m in revenue and therefore when the ad market recovers SWM stands to profit massively from this improved market share when compared to the last Covid-19 market recovery.

It is always trendy to ignore an out of favour business ...until it isn’t, and at that stage all that is left is for the people who couldn’t bring themselves to buy SWM at 20 cents to then jump on the bandwagon and start chasing the market higher at 60 cents. This behaviour only makes sense if you don’t appreciate any of the Warren Buffett or Phil Fisher concepts such as margin of safety or intrinsic value but ultimately it is also behaviour which makes you the investor much poorer as a result.

The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values. Warren Buffett