William Cohan, Best selling author discusses his latest book Power Failure: The Rise and Fall of an American Icon

The Interview Discusses: 

  • The rise and fall of GE.
  • What could have been done to save General Electric.
  • Who is to blame for GE’s demise.
  • His in-depth interviews with both Jack Welch and Jeff Immelt.
  • The fundamental error that Jack Welch made that tarnished his legacy.
  • How GE capital almost filed for bankruptcy during the financial crisis.
  • What Disney can learn from GE’s succession issues.
  • The mistake GE made by selling NBC Universal to Comcast (and one thing about the deal you probably  never knew).
  • His latest media venture called Puck.
  • And much more…

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About William D. Cohen

William D. Cohan, a former senior Wall Street M&A investment banker for 17 years at Lazard Frères & Co., Merrill Lynch and JPMorganChase, is the New York Times bestselling author of three non-fiction narratives about Wall Street: Money and Power. His new book Power Failure: The Rise and Fall of an American Icon, about the rise and fall of GE, once the world’s most powerful, valuable and important company, was published in November 2022 by Penguin Random House. He is a founding partner of Puck, a digital publication owned and operated by journalists, and a writer-at-large for Air Mail. For 13 years, he was a special correspondent at Vanity Fair.

Click Here to Read the Interview Transcript

 Transcript of the Interview With William D. Cohen:

Jonathan Boyar (00:05):

Welcome to the world according to Boyar, where we bring top investors, best selling authors and business leaders to show you the smartest ways to uncover value in the stock market. I’m your host, Jonathan Boyar. As a big fan of his work. I am very excited about today’s special guest award-winning author William Cohen, who has written multiple New York Times best-selling books, including his latest, focusing on general electric power failure, the rise and fall of an American icon. Bill, welcome to the show.

William Cohan (00:39):

Great to be here, Jonathan. Thank you for having me.

Jonathan Boyar (00:41):

Thanks for coming on. As I said, I’m really excited about the show. And before we get to your latest book as well as Puck, the digital media company you co-founded, both of which I really enjoy and highly recommend. I just want to delve a bit into your background. So you started your career in journalism and then received an MBA at Columbia and had a really successful m and a banking career. Worked at some great firms like Lazar for 17 years, but then you did the transition back into journalism. How were you able to do that?

William Cohan (01:16):

Well, I think desperation and fear had a lot to do with it. I was in my young forties when JP Morgan Chase decided that my career as an investment banker was over. I needed something to do. And at that time, around 2004, there were very few opportunities in banking open for me. And so I decided, okay, 17 years is enough time to do something else. And I thought, well, what can I do that I don’t need anybody’s permission to do that. I don’t need a boss to do that. I don’t have to work for anybody else ever again to do. And I landed on the idea of, you know, essentially going back to journalism by proposing to write a book about Lazard where I had worked, albeit 10 years earlier with no thought of ever, of course going back to writing or writing a book about Lazard. So it just occurred to me that it was just this fascinating and amazing place that was private that nobody hadn’t written about in decades. And having worked there, I sort of knew it from the inside out and knew most of the people who worked there and was hoping that they would give me interviews. Anyway, so I proposed this book, I wrote a hundred page proposal and got an agent and incredibly publishers went for it. So the rest is kinda history.

Jonathan Boyar (02:49):

Not only did publishers go for it, I mean I think you won the Financial Times Book of the year. I mean that’s a, an amazing fee for your first book.

William Cohan (03:00):

That was incredibly satisfying. It was an incredible day. My wife and I flew to London. There was a ceremony at the beautiful public library and London and you know, I was one of five finalists along with Tole for Black Swan and Alan Greenspan for his book about his memoir about being fed chairman. And we did not know who had won. They decided it right before they announced it and when it was me, I couldn’t quite believe it. You know, at the Oscars they put the people who are likely to win in the front row. So there’s not a long walk between getting from the front row to the stage so they can collect their award. The ones who were unlikely to win, they put way in the back. So I was way in the back and took me like 15 minutes to get up to the front to get the award from none other than Lloyd Blankfine, the c e o of Goldman Sachs at the time, who gave me the award. It was great.

Jonathan Boyar (04:06):

That must have been just especially satisfying after your kind of your career setback to really prosper on your first go around.

William Cohan (04:16):

And then it led to my ability to get back into journalism again. I mean, I got a call from Graydon Carter after that. Did I want to write Vanity Fair? Did I want to be your columnist at New York Times? You know, well all these wonderful things started happening and that’s how I resurrected myself, as you say, after a severe career setback that I wasn’t anticipating and had done nothing to deserve. And I had two young sons. And so it went from sort of being all encompassing as a banker to being around all the time at home and trying to figure out what I was going to do next. I don’t recommend this path for anybody, but must say that if my former colleagues at JP Morgan Chase hadn’t terminated me with extreme prejudice, then I probably wouldn’t be a writer today. So I’ve often thought of dedicating one of my books to them to thank them for what they did for me.

Jonathan Boyar (05:18):

You should you know, writing these books seemed like a much better life and more rewarding than being an M&A banker. Not that there’s anything wrong with being an m and a banker.

William Cohan (05:27):

Look, I couldn’t do what I do now had I not done that for 17 years, you know, it was not something that I was passing through. It was a long time. You know, Michael Lewis, who I is a friend and have incredible respect for and don’t understand how he does what he does, he worked at Solomon I think for two years. 17 years is quite a different kind of commitment. You know, I have come away with a deep understanding of the industry, not only from having doing it as a banker, but now writing books about it or now more than as a banker. And you know, as you say, being able to do my own thing, having no boss. I don’t have to worry about colleagues scheming behind my back to get rid of me. I have my own equity, which I share with my publisher and we have a great partnership and I can do pretty much what I want on a daily basis. And you know, frankly, I don’t think there’s any better way to run your life.

Jonathan Boyar (06:28):

You wrote about the Duke Lacrosse scandal as well as, you know, other books detailing the Global Financial Crisis House of Cards, which I highly recommend. But the reason you’re here today is about your latest book on GE, which some have described and I think quite accurately in my opinion as a corporate autopsy. How did this book come about?

William Cohan (06:51):

What I do on a subliminal basis, I don’t set out to do this, but whatever reason, it does seem to work out this way that every book I’ve written, I have some sort of intersection with, you know, professionally or personally. You know, I’m not starting from scratch. You know, a lot of writers choose topics that they know nothing about and wanna find something about and do it because they’re intellectually curious. And I totally get that and I do do that. But I also find that there’s, you know, an intersection with my life, which I think gives me a little bit of a leg up like the book about Lazard, while I obviously worked there for more than six years. And so knew about the firm, you know, intimately competed against Goldman Sachs, competed against Bear Stearns, went to Duke, my book about my friends from Andover, I went to Andover ge, the same thing when I was at Columbia Journalism School, 19 82, 83 out of the blue I got asked to go on a trip for a day on GEs corporate jet to go see their lighting manufacturing plant in Cleveland and then onto Louisville to their major appliance plant.


And you know, it was an incredible experience to see these facilities and to be, you know, flown around on a private jet. Mine was my first time on a private jet ever. I didn’t even really know that there were private jets. So that was sort of in my mind. And then my first job at a Columbia Business School was GE Capital Financing Leverage Buyouts. So I mean, I’d been a journalist covering public schools in Wake County, North Carolina, which was fascinating. And then went to business school and then as one did you know, in the late eighties when all you had to do was breathe to get a job on Wall Street, I got this job financing leverage, which is of course absurd. So I did that for a year and then worked for the Chief credit officer at GE Capital in Stanford for a year and then, you know, moved on to Lazard, et cetera.


And so again, I knew about GE from having worked there, not well or anything, you know, again, I never thought I’d ever write about it. And then fast forward 30 years, one of the people that I had started with at GE Capital at my office mate, was John Flannery, who turned out, stayed at GE and rose up through the ranks incredibly, and was Jeff Al’s successor. So he and I remained friends to this day and for 30 plus years. And when he was C E O, which I thought was an incredible feather in the cap for ge, he’s an incredible guy and deserved that reward or what we thought of as a reward for his incredible performance at ge. And it turned out to be an albatross. So during the course of that, he was only there for 15 months as the ceo you know, he would occasionally share with me how difficult things were and what he was surprised about.


And at one point he said, well you should write a book about this. And I said, but John, I can’t write a book about this. You’re the ceo, you’re my friend so I can’t do that. So interesting suggestion but not going to happen. And then after 15 months, he was unfairly and summarily fired and was essentially what was Theta. And I thought to myself, well now I can write a book about this and frankly I need to figure out what happened here. There’s like a dead body on the floor. How did it get there? And when Jack Welch said that he would speak to me, well that kind of sealed the deal.

Jonathan Boyar (10:27):

The part about Welch speaking with you, it’s like all your books is extensively researched over 700 pages. It’s hard to tell when you’re reading on a Kindle how long it actually is, but it’s still a page turner. It really draws you in at the very beginning. You know, you have your initial meeting with Jack Welch, which I thought was fascinating. Can you tell me a little bit about it?

William Cohan (10:52):

Of course, I knew who Jack was and knew him a little bit from the island. And so I called him up and said I wanted to do this. And he agreed incredibly. And then we agreed to have our first meeting at the Anti Golf Club, which was around the corner from both of us. He wanted to have lunch. So we get there, I mean, I’m not a member there he was, and also at the nearby Sanity Golf Club. So we agreed to have lunch. And first thing out of his mouth before I can even sit down is that he feels like he totally screwed up the selection of his successor, which was quite a revelation to me. And needless to say, and I thought, wow, this is incredible. We had lunch at the next table, it turns out was Phil Nicholson who’d been playing golf that day, cuz it was a Wednesday before the Thursday tournament began in Massachusetts, the Deutsche Bank tournament.


And he was there with Bob Diamond, who was the former c e O of Barclays, who I knew too, who grew up on Nantucket and Paul Salem, who was one of the founders of Providence Equity Partners who grew up in the same town as I did in Massachusetts. And so I thought I was like Old home week here, this is incredible. And Phil Nicholson and Bob Diamond and Paul all came over and paid homage to Jack and like everybody would just continuously pay homage to Jack, which I totally get. And it was the beginning of a incredible time where Jack met with me six or seven times between the Tuck in and Manhattan, New York at his home in North Palm Beach. And basically completely laid out for me, you know, his personal story, his history, his career, his growing up and what it was like running GE. And then his disappointment with choosing his successor, which of course he chose, he could have chosen anyone else. He chose Jeff Alt and I think was quite disappointed with the way that worked out and was quite eager to share that with me on many, many occasions.

Jonathan Boyar (13:07):

As I said, the book was extensively researched. I, I learned a ton, not just about Jack Welter, I’d like to talk about more in a little bit, but it’s also some facts or myths about GE that I guess I just assumed were correct and they weren’t first thing, Thomas Edison was not as involved with GE as the company would like you to think. Is that correct?

William Cohan (13:32):

That’s absolutely correct. In fact, everybody seems to think that Thomas Edison was one of the founders of GE. The one day that the company under its current leadership, Larry Culp agreed to cooperate with me on this book One day only. They let me go to both Crotonville on the Hudson, which was their management training center, which was phenomenal and that they’re now selling or trying to sell. And they also let me go to their research center in NI outside of Albany, which was also phenomenal. And you go in there and the first thing you’re just assaulted by is, you know, all of the Thomas Edison paraphernalia, his desk, the stock ticker, his awards, his accomplishments, his quotations. So I just assumed like everybody else that it was his doing that created this company and his company that became GE. And actually it turned out that’s not right, which I found fascinating for obvious reasons.


The real story is that yes, Thomas Edison was obviously the person who helped to create the light bulb and to help create generation of electricity. So that’s all true. And he created something called Edison General Electric, which was one of the two companies that was merged together along with something called the Thompson Houston Company to form GE in 1892. But by that time, Edison General Electric was not doing particularly well. Thomas Edison was no longer the c e o of the company, his main venture capital backer. A guy named JP Morgan was not that happy with Edison and the CEO of Edison General Electric was in guy named Henry Ard, who was another venture capitalist slash railroad Barron. He was for some reason the c e o of the company at that time. And basically ARD and JV Morgan decided that they wanted to merge Edison General Electric with Thompson Houston, which was backed by a guy named Charles Coffin and his venture capital supporters in Boston.


And Edison was completely against it and tried to thwart it at every turn and ultimately could not, as I like to say, the money man won out. And Coffin was the new CEO Edison wanted nothing to do with it and quickly sold his shares in the company and fluked off to New Jersey to do some sort of like limestone mining project, which ultimately failed to. So is he in the DNA of the company? Sure, yes, he’s in the DNA of the company, but was he a champion of the company’s creation? Absolutely not. He tried to thwart it at every turn and was overruled by the moneymen, which again, very typical as we know. Now,

Jonathan Boyar (16:36):

Another thing that I learned that I found fascinating is, you know, one of Welch’s most lauded deals was buying company. People growing up today probably never heard of but R C A, which housed N B C. However, he was really just buying back what GE had owned years before. You know, that’s a fascinating story as well.

William Cohan (16:58):

Again, one that I had no idea about either. You know, Lazard was involved, Felix Rohatyn was involved in the acquisition of RCA by GE six point whatever, 4 billion deal in 1986. I think that was the largest m and a deal in history at that point. It was on the front page in the New York Times, you know, biggest deal ever. And obviously very exciting, GE getting into the media business by owning NBC. You know, what’s jack up to? It was sort of the embodiment of Jack’s thesis that GE needed to be either number one or number two in any industry that it was involved with. And if it wasn’t, you know, you had to get out of it or if you wanted to be, you had to buy it. So I mean this encapsulated it all. And of course RCA was another mini conglomerate with other things in it besides NBC.


And it turned out I had not realized, and very few other people had realized either that GE had actually started what became RCA inside GE after World War I. Because GE had developed the very exciting radio technology, the radio broadcast technology that was used during World War I by the allies to communicate to each other over secret communications cables or lines or whatever. And a scientist at GE who had developed that technology. So after the war, Woodrow Wilson, the president and Franklin Donor Roosevelt, who was the secretary of the Navy or something like that, didn’t want GE commercializing this technology and selling it. One of the biggest customers for this technology was Marconi, which was a UK company that was a competitor of GE in this radio space, which was again the hottest thing going in 1892. The hottest thing going was GEs electricity distribution and generation business in 1917, 1918.


The hottest thing going was GEs radio technology. And basically the US government didn’t want GE selling it to the British who were our allies during World War I. They wanted the US to control that technology and basically insisted that GE not sell the technology to Marconi and in fact encourage them to create a separate business inside GE called RCA Radio Corporation of America to own that business. And basically the government encourage GE by giving them patents and other business so that they would compensate GE for not being able to sell this technology to the British. Marconi had an American subsidiary, publicly traded American subsidiary called American Marconi, and GE bought that in like a 25 million acquisition. And RCA was off to the races then in the 1930s, again, for reasons that I’ve never really quite understood other than it was too good at what it did.


It forced GE to spin off RCA into its own public company and that’s when David Sarnoff became the C e O of rca. So from the 1930s to, you know, for the next 50 years, RCA was its own independent company, became a mini conglomerate that owned everything from like banquet chicken to carpet manufacturer to big television manufacturer to of course N B C, both on the television and the radio side. It was in all these crazy things, many of which my firm Lazard had helped them put together. Then Jack decided he wanted to buy it and essentially buy it back.

Jonathan Boyar (21:05):

It’s fascinating. I want to get back to that at some point because alt later sold it to Comcast for a song. But just take a quick step back. The book is called The Rise and Fall of an American Icon. And in my opinion, the title is a dramatic understatement as GE just did not rise to become the most powerful company in the world, depending on someone’s age, they wouldn’t realize how important GE was to American business. In some ways they were the Apple or the Microsoft of their day. Now they’re being the process of being broken up into a few separate companies that’s already started to occur whose total market cap is a fraction of the market cap. GE was when Jack Welch retired in 2001. Besides the obvious that nothing lasts forever, what can successful companies learn from your book to prevent what happened to GE from happening to them?

William Cohan (22:04):

If I had the real answer to that, Jonathan, I would probably be the highest paid consultant in the world. And the most sought after each situation, of course, is sui generous. I think ultimately GEs downfall occurred not because it owned GE Capital, one of the largest unregulated financial services companies in the world, which obviously suffered dramatically during the 2008 financial crisis, which again, talk about discovering something that nobody knew. Very few people realized the trouble that GE was in as a result of the 2008 financial crisis. Everybody knew what trouble the banks were in, you know, wall Street banks and the car companies and AIG. But you know, GE was as desperate as any of them and they kind of did it on the down low and got rescued very quietly. Not part of the tarp, not part of a specific rescue.

Jonathan Boyar (23:09):

They were close to filing bankruptcy, correct?

William Cohan (23:13):

GE Capital had hired Solomon and Cromwell twice to prepare the bankruptcy papers for GE Capital, which I had no idea about. And I worked at GE Capital and presumably was paying attention to these things, written two books about the 2008 financial crisis, you know, the collapse of Bear Stearns for one, and how Goldman Sachs made it through without suffering the same fate as Bear Stearns. And I didn’t know about it. So how do you avoid what happened? I think a lot of people would say, well, that Jack just planted the seeds of the destruction that occurred on Jeff ALT’s watch. I personally don’t subscribe to that theory. I think obviously Jack didn’t subscribe to that theory. And I agree with Jack. I think had Jeff listened to the warnings that he was being given regularly about the risks that were inherent in the way GE Capital was financing itself, financing itself in the short term commercial paper market, and then lending long term.


So the big mistake that people make in banking and always gets banks into trouble is borrowing short and lending long. Now that’s of course what fractional banking is all about. That’s what the banking system is all about. You couldn’t have banks if they couldn’t borrow short and lend long because that’s how they make their money. But you have to be constantly aware of the risks that are inherent in that model. Now look, even if you theoretically do understand how banking works and you do have a finance background, you would’ve thought Dick Fuld understood how banks worked and had a finance background, but obviously Lehman Brothers went down the tubes and you would’ve thought Jimmy Cain understood at Bear Stearns the risks in banking. So I’m not saying Jeff Immelt was unique in this, but he had been warn several times by Bill Gross, of course, the one time Bond king.


He had been warned repeatedly by James Grant, my hero at Grant’s interest rate observer repeatedly and even by his own treasurer about the risks that were building up in GE Capital. But Jeff, you know, is not a finance guy despite having gone to Harvard Business School, he was more of a marketing guy. He was an incredible salesman. He could probably sell ice to the Eskimos to use the pathetic cliche, but you know, he failed to really appreciate the risks that were building up at GE Capital. And then when people told him, another story that I found incredible was Michael Pralle, who was running GE Capital’s real estate business, which was incredibly successful. Basically begged Jeff to begin to sell GEs real estate business in 2007. And Jeff ignored it, ultimately fired him, was waving a McKinsey study in front of everybody’s nose saying that the real estate trees were going to grow to the sky.


And then of course a year later, <laugh>, the real estate market was a disaster. And Michael Pralle was right and Jeff should have listened to him. Jeff should have listened to a lot of people that he did not listen to about the risks that were in GE Capital. So my view is you’ve got to choose a ceo. It’s so basic, who really understands the business lines that the company is in. If half of your business is coming from a gargantuan, unregulated financial services business, you’d better have a pretty good idea of how financial services work. So I don’t think Jeff did, and I think Jeff got into deal heat and he either would pay too much for companies he wanted to buy, or as you were referring to NBC Universal, you know, he sort of got snookered by Comcast when he got desperate to sell something, anything. As he burned the furniture beginning in March of 2009 when he sold that to Comcast for two pieces, what ended up being around 30 billion? Well, you know, pretty much in no time n NBC Universal was worth a hundred billion obviously before the pandemic. Now it’s had some tough times, not worth that much at the moment, but certainly worth more than the 30 billion that Comcast paid for it and Jeff sold it without an auction. How do you sell something that valuable and important without an option? I don’t get it.

Jonathan Boyar (27:48):

So basically you’re pointing a little bit to se succession pointing to leadership as obviously things that are very important to companies. So for a real world example, you know Disney right now is in a business that’s undergoing major change, you know, streaming, et cetera, and Iger claims he’s not going to be there for more than a couple years. What could Disney learn from GE to help find the right successor to grow through these transitional problems?

William Cohan (28:21):

She’s somebody who is highly skilled and highly competent, who understands the business lines that you are in, right? There was reporting over the weekend from my friend Charlie Gasparino  about Adam Silver, the NBA commissioner being on the shortlist to run Disney. Now, I don’t know Adam, we’re both Duke graduates. He’s got one of the greatest jobs in the world, he’s very tall.

Jonathan Boyar (28:53):

Why would he give up that job?

William Cohan (28:54):

Why would he give up that job to be CEO of Disney? A job for which he is extraordinarily unqualified. Extraordinarily unqualified. So if the Disney Board chooses Adam Silver and then Adam Silver makes the mistake of accepting the job, that is a disaster. That’s like not learning anything from the GE experience. That’s just incredibly huge mistake. I understand the headline attractiveness of potentially having Adam Silver be your c e o because that’ll bring a lot of attention to Disney and some NBA like excitement. Okay? But he doesn’t understand anything about the business. He’s never worked in the business. Negotiating television contracts with ESPN and a B C is not the same as running the movie business, running the entertainment business, running the cruise bus, all the businesses that Disney’s, again, it’d be a disaster. So I don’t know how his name gets I on a list like that, but obviously please Disney Board do not make that mistake.


And the problem is, you know, again, and Jeff Immelt did it and unfortunately Jamie Dimon does it, these guys hang around the hoop too long. They have a bad habit of sort of wanting to get rid of any executive who potentially threatens them either, you know, potentially as a successor or just either power play kind of way. And so, you know, the cupboard is kind of bare cupboard is kind of bare at JP Morgan for a successor. The cupboard is kind of bare at GE. Now, again, I’m so glad they chose John Flannery, but to not give him the chance and the runway to do what needed to be done was unconscionable the cover of his bear at Disney. Obviously, you know, Iger chose Chapeck and then he gets rid of him after two years. I mean it’s kind of unconscionable. So it’s really important to develop talent, to nurture talent, to not become an Imperial c e o and think that you are the only one who can do the job to recognize that IER was there for 15 years.


Of course Jock was there for 20 years. Immelt thought he was going to be there for 20 years. He only made it to 17. That’s just too long. Sorry, you’re not there to be the Imperial c e o. You’re there as a steward for a great corporation. That was once in G’s case, the combination of Apple and Microsoft and Google rolled up in one. It was this huge technological leader, it was a financial leader. It was the most respected company of all time at one time. It was the most valuable company of all time at one time. And you know, you are a steward of that, that’s a privilege and you’re not allowed to wreck that. And yet it gets wrecked. Joseph Schumpeter, the Austrian economist, talked about creative destruction and unfortunately it’s truly there even though you can’t see it. You know, obviously Apple has had its ups and downs, but since Steve Jobs came back the second time and Tim Cook who doesn’t nearly get the credit he deserves, he took over a company that was worth 300 billion and now it’s worth two and a half trillion. I would say that that is an incredible value creation job that he has done. But no one can imagine Apple going away at this point, but I suspect it will. Nobody would’ve expected GE to disappear, but it’s disappearing.

Jonathan Boyar (32:34):

Do you think he gets too much credit? I mean listen, you can’t argue with the numbers 12 billion when he started 12 over 650 billion. But if you put the time period, he went over the greatest bull run in US stock market history. I mean he was at 20% a year. I think GE Stock compounded the s and p I think roughly 14%. You know, I don’t know if you’ve read The Outsiders great book, he talks about eight CEOs.

William Cohan (33:06):

Yeah, I have read that book. I know him.

Jonathan Boyar (33:08):

Yeah, <laugh>, who kind of says Welch. And you know, he devotes his introduction, not really criticizing Welch just saying how much credit these other people should get. I mean, do you think part of this was just a media play?

William Cohan (33:22):

Jack had the media beating out the palm of his hand, obviously owned  NBC started CNBC and MSNBC and would go on CNBC all the time. So he owned and started one of the most important financial news networks. So he had the media eating out of his hand cause he was so charismatic. And he also had the Wall Street research analysts eating out of the bottom of his hand largely because as you said, I mean every quarter he met or exceeded expectations, 80 straight quarters. And I would say that pretty much every Wall Street research analyst who covered the company covered it because they were manufacturing or industrial research analysts, not financial services research analyst. So they didn’t understand the risks that were brewing at GE Capital only Jim Grant did is more of a financial journalist than a research analyst, although it could go either way on.


That doesn’t work for an investor bank publishes a newsletter. So the combination of having the Wall Street research analyst eating out of the palm, his sand and the media eating out of the palm of his sand and then just outperforming every quarter. I mean that’s very potent, obviously. I mean you might have been like the meme stagger of its day, but certainly it’s valuation got out of hand. You know, people say to me all the time, oh my God, geez, valuation, can you believe it? It was 45 PE or 60 PE for an industrial business, you know, in a financial services business. That was like ridiculous alchemy. And yet, you know, look at all the people who value Tesla at ridiculous multiples. What is Tesla for some reason in Tesla, which is a car company has in various times have been worth more than all the top 10 car companies combined.


Now I, I don’t know if it’s still worth as much as the top 10 combined, but something like that, it’s absurd. That’s a company that’s changing the world and we should not question its valuation, but GE, which also was changing the world and was actually generating the profits now obviously in retrospect was overvalued. But you know, I think Jack was the beneficiary of a very long bull market. But you know, it’s always something Jonathan, it’s always something. I mean I listened to David Solomon the other day at the Goldman Investor Conference. You know, we’ve just been through the roughest three year period, the most volatile three year period. You know, who could have predicted? It’s always something. It’s always something. And so sometimes you have the good fortune of living through, you know, a long bull market. But it wasn’t a straight line. It was 1987, which was significantly down year and what’s been the greatest performing sector and one of the greatest performing sectors since the 2008 financial crisis financial services. Because a lot of the competition went away. And so actually it was a mistake in my mind, but obviously I wasn’t the c o for Jeff Alt to get out of GE Capital to sell GE capital because he didn’t like being a sifi. Well the financial services industry, if he stayed in it would’ve saved GE instead of getting out of it and using the proceeds to buy back stock when it was overpriced.

Jonathan Boyar (36:42):

I fully agree with that. And not to defend alt because he really destroyed value, but if you come in at 47 times earnings as the CEO and you know, GE stock fell about 30% in value over his tenure. A lot of that is just multiple compression. So I guess using just the stock price probably wouldn’t have been a fair judge of how he did.

William Cohan (37:09):

I asked Jeff, he came into the job a day before nine 11. His first day in the job was September 10th, 2001. Obviously the world changed dramatically on nine 11. I experienced it myself. Many of us did, especially on Wall Street. And it was a tough time for ge. They made the engines on the jets, they had reinsured some of the buildings on the Work financial center. They lost some employees. They owned NBC, which went without advertising for a period of time. Jeff, why didn’t you reset? Why didn’t you say to the investment community, to the Wall Street research analysts as people suggested that he do by the way reset and say, look, okay, I can write the script. I’ve just succeeded the greatest c e o of all time. This is an incredible company. But you know, as we’re going to see now post nine 11 people were too enthusiastic about the valuation of the company.


I wanna reset you all to what is the new reality here? It’s going to be tougher. The insurance business is tough. The jet engine business is going to be tough. The power business is going to be tough. The financial services business is going to be tough. NBC is going to be tough. Let’s just reset everybody’s expectations around what this company can do. It’s still a great company. We had an unbelievable leader and let’s just reset. So the stock would’ve gone from 40 to maybe 30 or 25. That would’ve been the best thing that would’ve happened to Jeff. But he wouldn’t do it. He didn’t wanna do it. And I kind of understand that too. That’s a very hard thing for a CEO e o to do, especially a new c e o.

Jonathan Boyar (38:48):

And Jack would’ve killed him.

William Cohan (38:49):

Jack might’ve killed him. He threatened to kill him after March of 2008, after Bear Stearns went down the tubes, when he missed the first quarter of 2008, Jack went on CN b c and said, I, I’m going to take out a gun and shoot you on national television if you missed earnings projections again. So you’re right, he might have, but you know, Jack wasn’t the CEO anymore for Jeff’s own wellbeing and the well being of the company and the expectations that he was setting for the company, he really should have done that. Now again, it’s easy to do that in retrospect, that’s the easiest thing in the world, but he should have done it.

Jonathan Boyar (39:28):

Really cognizant of your time and you know, I love the book. I just briefly want to talk about one of your other ventures puck, which I’m a big fan of. It’s an online, I guess, media company, you know, financial news and et cetera. Can you just explain a little about it, why you formed it and tell us that story?

William Cohan (39:50):

Ever since I was a newspaper reporter in Raleigh, North Carolina, as I mentioned, I never understood why publishers viewed journalists as cost centers, as a cost of the business as opposed to content creators and should be rewarded as content creators. The reason he’s able to sell ads and subscriptions is because of what we were writing, but we were treated as a cost to bear. The newspaper would have 60% EBITDA margins and part of that was because he was paying people like me, 13,000 a year. I mean it was absurd. So I always found that quite objectionable, but not that I could do anything about it. And not that it’s changed any, but along comes puck, the idea of Puck. And one of the main ideas behind it is that the journalists or the content creators, everything that I had talked about and thought about in 1982 and 1983 when I was in Raleigh.


So here we are nearly 40 years later and this is coming around and I was at Vanity Fair and it was started by John Kelly, my former colleague from Vanity Fair. And the idea being that I’m going to get the best journalists and writers that I can and I’m going to give them equity in this venture as well as pay them because I recognize that without them we have nothing and we have to build this business around them. And that was sort of everything that I had thought of. And that didn’t happen at Vanity Fair. That doesn’t happen at the New York Times. That doesn’t happen the Washington Post. That doesn’t happen at the New Yorker. The writers, the journalists deserve equity. We deserve to benefit from the value that we are helping to create. So that was very appealing to me and that’s why I decided to leave Vanity Fair after 13 years. Also because I didn’t really recognize the new Vanity Fair anymore after Gradon left.

Jonathan Boyar (41:50):

As part of, you know, at Puck you write a lot about the media business. I mean it’s an area that you obviously know quite well and you write about Zla and Warner Brothers Discovery and you have an interesting theory, which I do share on what’s going to happen in the media landscape or what you think would happen. And that’s NBC Universal, which you know, took go full circle back to your book, somehow combines with Warner Brothers discovery and you know, I’d just love to kind of hear your thoughts on that.

William Cohan (42:21):

I get a lot of heat for this idea or pushback. Look, I think that you have to somehow be able to see Ryan Corners and that’s Z’s job, that’s Brian Roberts job each on its own aspires to be the top competitor in the industry or the best in the industry, right? Let’s stipulate for all the problems that it’s having, that Disney is at the top of the heap, but there’s also incredibly deep pocketed competitors like Apple with its, you know, apple TV and Amazon with MGM and Prime. And then you know, down at the sort of bottom is, you know, our old friend Paramount Global, which is kind of an afterthought at this point. Even though it has some attractive assets, it’s valuation is sort of disappeared. So in the middle you have Warner Brothers discovery with incredible assets and you have n b NBCUniversal with incredible assets to be at the top tier of the competition.


It’s just inevitable that they’re going to have to combine. Not only are their assets relatively complimentary and I think and be hard at this moment in this regulatory regime, which is being particularly persnickety after years of doing nothing after, you know, hands off. But I think they can’t do anything anyway until the reverse Morris Trust rules are fulfilled, which is two years of being independent. So that would be April of 2024. So sometime in the run up to April, 2024. Cuz you know, these deals take a long time to close. It seems inevitable to me that Warner Brothers Discovery and N NBC Universe are going to have to get together, create some sort of joint venture, a combination where I think Brian Roberts kind of needs to have 51% ownership. So he gets 51% with Z running it as the c E O and then they become an extremely formidable competitor to Apple, Amazon, and Disney.

Jonathan Boyar (44:20):

In some ways, they become Disney in that they have theme parks, a network, and great cable assets.

William Cohan (44:28):

That’s right. They might be better than Disney. They don’t have a cruise ship, I don’t think so. Don’t have to have that headache.

Jonathan Boyar (44:35):

Well, if the NBA commissioner becomes CEO of Disney, they will be better

William Cohan (44:41):

If they make a mistake and choose my fellow dookie, Adam Silver as the NBA commissioner. That will be a big mistake. And the combination of N NBCUniversal and Warner Brothers discovery will be number one. Now, you know, it’s interesting. Both Warner Brothers discovery and Disney have about the same amount of debt at this point. Nick Dad, close to 48, 50 billion. It looks a lot better on Disney than it does on Warner Brothers discovery. And now as you mentioned, Zaz and his team recut their compensation deal so that they’re rewarded for paying down debt. They have done a good job of paying down the debt at the expense of obviously CNN. People gripe quite a bit about what’s going on over there and other people gripe about what’s going on in other parts of the business. But his main job now is to pay down this debt.


They have to get to investment grade. And now the CFO has promised that they will, they’ve got to do that. All bets are off until they do that. The equity is up this year. It was probably oversold last year, but to create more equity value, it’s like a publicly traded LBO at this point. They’ve got to pay down the debt and get the equity value up and then, and that’ll give him the currency to do a deal and all good things will happen at that point. Then he has more leverage with Brian Roberts, who’s obviously going to drive a hard bargain. So I applaud the W B D board for whatever they did to recut the compensation package, whose eyes has plenty of money. So I don’t worry about him, but he’s got to be rewarded for paying down that debt.

Jonathan Boyar (46:14):

One thing with that debt though, and I don’t know if it was Malone, I don’t know if it was a board, I don’t know if it was Zaslav, but they did a fantastic job in that. Most of that debt is fixed rate. Most of that debt is due past 2040. So least he has the benefit of time,

William Cohan (46:29):

Right? But don’t forget when the deal was done, the deal was done when the Fed was making money free. You know, on the other hand, you know at and t, the price of admission was taking, you know, whatever, 50 plus billion of debt, forget whether it’s fixed rate or floating, right? It’s still 50 billion of debt, you still have to pay it back. It’s a shit load of debt on a company that wasn’t generating that much ebitda and who knows what the EBITDA is. Cause they’re now going proforma adjusted EBITDA.

Jonathan Boyar (46:58):

There’s a lot of jargon,

William Cohan (47:00):

Please stop with the proforma adjusted. Just what is the real EBITDA number? Stop. Because that’s what creditors really need to know. That’s what the rating agencies really need to know. That’s how you’re going to establish credibility in the credit markets, and that’s what it’s all about right now.

Jonathan Boyar (47:17):

Well, bill, I really want to thank you for your time. I love talking about your book Power Failure, which I highly recommend people check out. And I’d also recommend people take a look. If you’re interested in media finance, take a look at Puck. You know, it’s a site I personally subscribe to. I get a lot of really valuable information there. And just thanks for appearing on the world according to Boyar.

William Cohan (47:41):

Thank you hiring me, Jonathan. It was great.

Jonathan Boyar (47:44):

I hope you enjoyed the show. To be sure you never miss another world according to Boyar episode, please follow us on Twitter at Boyar value. Until next time.

Tags: DisneyGeneral ElectricNBC Universal


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About The Boyar Family Of Companies

Boyar Asset Management
We have been managing money since 1983 utilizing our proprietary in-house value-oriented equity strategies. We manage money for high net worth individuals and institutions via separately managed accounts. To find out how we can help you with your money management needs please click here

Boyar Research
Since 1975 we have been producing independent research on intrinsically undervalued companies across the market capitalization spectrum and in a wide variety of industries using a business person’s approach to stock market investing. To find out how we can help you with your research needs please click here

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Bank of America, Disney, and Uber All Look Like Bargains

The Boyar Value Group was recently featured in Barron’s in an article penned by Nick Jasinski discussing stocks that appeared in our recently released Fresh Looks: A Special Opportunity Issue.   An excerpt from the article is below.

“We’ve become increasingly bullish over the medium to long term,” says Jon Boyar of the Boyar Value Group, which includes an investment firm, Boyar Asset Management, and a research arm, Boyar Intrinsic Value Research. “Has the market bottomed? I have absolutely no clue. But I think many stocks have reached a point where the risk/reward is solidly in investors’ favor.”

Boyar’s approach is a more opportunistic style of value investing than traditional value investing, which tends to focus on buying the cheapest stocks. That means defining value relative to his team’s estimates of a company’s future potential, not necessarily relative to the broader market or the company’s industry. Last week, Boyar Research put out a report called “Fresh Looks,” highlighting about a dozen stocks whose share prices have declined more than their business prospects. The median stock in the report was recently down 25% year to date and 32% from its 52-week high….

To read the entire article, please click  here (a subscription may be required).









This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. . This material is as of the date indicated, is not complete, and is subject to change without notice. Additional information is available upon request. No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this interview should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this article.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at https://adviserinfo.sec.gov Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.

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Jonathan Boyar on The Business Brew Podcast

Jonathan Boyar was a guest on Bill Brewster’s The Business Brew Podcast where he discussed the investment case for Qurate, Discovery Communications and Disney among many other topics.

Topics discussed:

  • What differentiates Boyar Research
  • Why we normally do not invest in energy stocks
  • What is the Forgotten Forty
  • How we find value in stocks that are not statistically cheap
  • What cannabis related business we are currently finding value in
  • The investment case for Qurate
  • One of the biggest mistakes value investor’s make
  • Why we invested in Twitter
  • How we approach investing in micro-cap stocks
  • The best way to avoid value traps
  • How we determine position sizing
  • How to potentially profit from the legalization of online sports gambling
  • Why publishing research has made us better investors
  • The investment case for Discovery Communications and Disney
  • A stock that investment legend Michael Price recently invested in








*This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. Past performance does not guarantee future results. This material is as of the date indicated, is not complete, and is subject to change.  Additional information is available upon request.  No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this interview should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable.   Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors.  This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research.  Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this interview.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.

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Jonathan Boyar on GuruFocus’s Value Investing Live

Jonathan Boyar gave a presentation for GuruFocus’s Value Investing Live series.

Jonathan discusses:

  1. The Boyar Value Group’s investment philosophy
  2. How we uncover intrinsically undervalued companies
  3. The investment case for Madison Square Garden Entertainment & Madison Square Garden Sports
  4. Two household names he believes are currently selling at attractive valuations



Transcript of the Presentation:


All right, welcome, everyone, to Value Investing Live today, I’m pleased to welcome our guests, Jonathan Boyar. Jonathan is president of Boyar’s Intrinsic Value Research, an independent research boutique established in 1975 that counts some of the world’s largest sovereign wealth funds, hedge funds, mutual funds and family offices as subscribers. He is also a principal of the investment manager, which has been managing money utilizing a value orientated strategy since 1983. Mark Boyar started publishing independent equity research on intrinsically undervalued companies in 1975, which led to the establishment of Boya Asset Management in 1983.


Defining intrinsic value as the amount paid to stockholders of a business is liquidated or sold. Boyar Asset Management remains true to Mark’s vision by specializing in equity securities of intrinsically undervalued companies. Their analysis of financial statements is driven by economic reality, and clients see profits as the markets reflect true value. As always, to all of our viewers out there, please feel free to post your questions and comments in the chat throughout the presentation. But keep in mind we will hold all of them until we hit the Q&A there at the end.


And without further ado, I’ll go ahead and hand things over to Jonathan so we can begin his presentation. Thank you, Graham. Much appreciated. And thank you to yourself and Charlie for inviting me. It’s always an honor. I know I spoke a few years ago at the Guru Focus conference and, you know, I was supposed to speak this year live, but obviously that got derailed due to the coronaviruses. But I truly hope to be there next year when things hopefully get back to some semblance of normalcy.


So I guess let’s start the title, my presentation, the Dolan Discount Opportunity or Value Trap? plus other opportunities. So I guess before starting this presentation can be downloaded by going to the website address on the bottom left hand of the screen. We’ll also be posting you always can follow us on Twitter @ Boyarvalue. So in today’s presentation, I’m really going to do three things one, give a brief background on the Boyar value group to discuss how we identify intrinsically undervalued companies.


And then talk about two Dolan controlled entities that, in our opinion, are selling at significant discounts to our estimate of intrinsic value, as well as to other companies that are household names that we currently find attractive. So here’s the for the lawyers, full disclosure of both myself. My clients own shares in all the companies I present today. I don’t think you would want it any other way. So who is the Boyar Value Group? This is a family run firm, it was founded by my father, Mark, in 1975.


To really be a research team looking at intrinsic companies through a different lens, what would a knowledgeable acquire pay for the business as opposed to what is a given company going to earn next quarter or next year?


And we’ve morphed into really two businesses. We have a research division where we sell our research on a subscription basis. We also have a money management division where we manage money for both individuals and institutions, large insurance companies, all sorts of different vehicles utilizing this really in-depth research. So we just kind of two sides of the house that are that are related. So first for your research, as Graham mentioned earlier, we have an institutional research service, we have some very interesting clients, I would say some of the world’s leading investors or clients of ours.


And it’s something we’re quite proud of. And we think, quite frankly, this gives us makes us better investors. And then we, as I said earlier, utilize these ideas for our Boyar Asset Management clients, include family offices, large institutions, and manage money through both pooled investment vehicles and separately managed accounts. So that’s a just a brief background on the organization, but what about the approach? How do we invest money and how are we different?


I think we’re quite unique. We consider ourselves businessmen trying to buy the proverbial dollar for 50 cents. We look at every company through the lens of an employer. A father is instilled in this into me since I was a little kid, that I’ve lived with this my whole life. If a company’s share price sells at a significant discount to what it’s worth over a reasonable period of time and I emphasize reasonable, the stock market will either reflect the true value of the company or an acquirer will.


So that’s why we look at everything through that lens, because we think it’s very, very helpful and it’s different than what traditional Wall Street does, where they just slap a multiple on a on a name. So we essentially take a private equity approach to public market investing. So people ask me, how do we come up with our stock ideas? We have a variety of ways that we uncover value which go over briefly in a moment. I’ll just go through each of these quickly.


The business value approach is one method. Wall Street has a way of making industries the flavor of the day, making stocks in that industry soar to ridiculously high heights and then go as high as they get. They get just as low. And that’s where we get involved. We Wall Street will sell indiscriminately. If a company is associated with a given industry, what we do is we look for industries that are out of favor that we think have long term potential to avoid value traps and look at the companies with the most competitive advantages, the best balance sheets and for valuation purposes.


What if similar companies been acquired for in the recent past? So that’s that’s one method. The hidden asset approach is probably my favorite method and one that we do utilize, and one of the reasons I like it so much is no computer screen in the world can replicate what we are doing. The only way to do this is just through rolling up your sleeves and doing your own due diligence.


So what is the hidden asset method? Accounting rules require the depreciation of certain assets that in fact often increase in value over time. So this leads to companies selling for significantly below them what they’re worth. And the best way to illustrate this is by an example. I’ve heard this story a thousand times by my father. This was the first stock or one of the first stocks we ever profiled in our research service, Tiffany and Company. So in 1975, when we started, you could have bought entire Tiffany franchise for twenty four million dollars.


The building it owned on 57th Street and Fifth Avenue, even during the depressed 1970s, was worth significantly more than twenty four million dollars. So you were essentially getting the business at less than zero cost, but the balance sheet couldn’t reflect this and the stock price languished. And we knew over time if we could stay the course, we would be fine. And you would realize and a few years later, Avon, which at the time was a highflyer, came in and paid a very handsome price for that for the company.


So that’s just a brief overview of the hidden asset method. The franchise approach is another area we love great consumer franchises, especially when they’re masked by corporate name. Believe it or not, this leads to valuation discrepancy because when you have a corporate name, people just put it kind of in the too art category or just ignore it. And the best example is one that we’ve recently or the last year or two profiled has done quite well for clients called Acushnet.


And probably half of you have no idea where Acushnet does, because it’s just so a corporate name, but they own Titlist golf balls and foot joint golf clubs. And you have to look at things through the lens of a portfolio manager and they see a Acushnet go across their stream screen and they.


Kind of might ignore it, but if the name of the company was title lists or whatever, the valuation discrepancy might type. So this seems very simplistic.


But believe it or not, it works. Fallen angels are another area that we like looking at, like looking at the once darlings of Wall Street that are now unwanted and unloved, just like in the business value method. Wall Street has a way of making stocks go to dizzying heights and then having them fall to levels that are just ridiculous. What we do is when that happens, we look at the business, we look, is this a sustainable business?


Is this a value trap? Is there something behind it? And if it is, it’s something that we might profile and eventually buy for clients. We also like looking at special situations, spin offs, or have been a fertile hunting ground for us. We like looking at companies post-bankruptcy as you can usually get things on the cheap that way, but not all spin offs are created equal. You have to be very, very careful and figure out why is a company spinning off a division?


We actually, a year or so ago did a comprehensive report discussing, you know, why spin offs over the last 10 years or so have significantly underperformed the market. But if you looked at certain factors, you could find success, potentially successful spin offs.


So our methodology, the business value method, fallen angels, special situations, that’s just the starting point. Equally important is a catalyst or a trigger. If a stock is simply just cheap, it can stay that way for a long time. That’s why you need a cabinet. You need to find the catalyst. Otherwise you’re going to fall to that value trap, which is what so many value. Investors make that mistake. So every time we come up with an idea, we have to come up with a story, a reason why is that stock going to go up over a reasonable period of time?


Barron’s once called my father Mark, the world’s most patient investor. I might not be as patient as him, but I’m pretty close and we’re willing to wait two, three, four years for our thesis to pan out, which I think gives us a competitive advantage. So what are our other competitive advantages? There’s a lot of money management firms out there. There’s a lot of research boutiques. What makes us different? I think the most important is our proprietary research publications, we sell for a lot of money to institutions, high net worth individuals, et cetera, comprehensive research reports, really, really deep dives that get sent to some in our, in my opinion, some of the world’s best investor.


And they’re not afraid to tell us when we’re wrong or to push back on our theories or our thesis, and that back and forth I think really helps us. Also, having to constantly come up with new ideas for our subscribers is really helpful. A lot of money managers run into the trap of just recycling their old ideas because we’re paid to come up with new ideas. We have to be fresh. We have to be on top of our game and constantly come up with these with these new with these new names.


Another competitive advantage for us is we invest in areas of the market that we’re under followed in industries that are out of favor, and we think these overall and micro-cap stocks and we have a separate microcap service called Boyar’s Microcap Focus, which has been extremely successful. We believe these overlooked areas of the market offer the greatest opportunities for outsized long-term returns. Things will be lumpy, of course, value investing certainly is currently out of favor, but we think over the long period of time this is a sound investment strategy.


We stood the test of time. My father started the business in the late 60s, started our firm in 1975, he still very much involved in the day to day operations of our business. And we’ve gone through terrible periods of time and persevered and survived. And company came out stronger on top. And we see no reason why this time will be different. And we’ve established a terrific team of seasoned analysts, investment professionals that have a diverse background, diverse skill sets, and I think one of the things that makes us different is we’re all generalists.


We’re all free to come up with ideas regardless of market cap, regardless of sector. And I think that gives us another competitive advantage, because sometimes there’s reasons to ignore, completely ignore a sector. And if you’re an energy analyst at a particular firm and there’s nothing to buy in energy, you’re just trying to justify your existence there. Our clients are our employees are our team members are free to come up with any idea, any market cap, any sector.


And we’ve done quite well by our research clients, which translates to our many of the ideas we publish, we buy for our money management clients, as you can see, I don’t want to toot our own horn, but we’ve done quite well both on the Boyar Microcap Focus and our traditional all cap product Asset Analysis Focus. Obviously, past performance is no guarantee of future results, as our lawyers make us say. But it’s you know, this is how we’ve done.


So now I’m just going to start talking about stock markets, as I mentioned, and we’re talking about the MSG complex and then talk about two other ideas that are more household names. Anyone who’s a Knick fan must think I’m crazy to want to invest in this company are controlled by the Dolan family. However, we have a very different view of the dolphins than most people, we’ve actually found them to be great people to invest alongside with. We’ve been following them a long time, as we wish we were shareholders in Cablevision.


And the Dolans tried to take the Cablevision private and admit to thousands, but the minority shareholders blocked them and thankfully they did. As since then, the Dolans unlocked a lot of value for shareholders. And one of the things that they did was spin out Madison Square Garden. And because of the valuation and the great assets that they owned, we decided to feature it in our February 2010 issue of our all cap research service. At the time of the spin off, MSG, had a lot of issues that were worrying investors and not too similar.


Today, the Knicks were terrible. Same as today. Then there was the possibility of an NBA strike and people were worried about heavy capital expenditures as they were upgrading the company’s flagship arena, Madison Square Garden. So there were lots of worries and it was greeted with skepticism. And that’s what gave us the opportunity as we saw fantastic assets. And as I mentioned before, you know, Wall Street doesn’t particularly like the Dolans, and they’ve been terrible if you’re a Knick or  Ranger fan, but as a shareholder, we’ve been quite happy with them.


When they when they controlled Cablevision, they had an industry leading dividend, paid a large special dividend, and they eventually ended up selling Cablevision to Altice at a price we never thought they would get. So that also demonstrates to us that they’re willing to part with assets and both. And we think one or both of Murphy and MSG’s could potentially be sold. The value of sports teams have exploded and you can see the value of the Knicks in 2009 compared to today, and the Rangers have gone up significantly over time.


And that’s for a variety of reasons, doing with the value of sports media rights and now sports gambling, which is a huge opportunity for them. So that’s part of the valuation. And I know it sounds strange to use the Forbes value, but that’s actually utilized quite heavily when during sports transactions. So here’s the current opportunity in April of this year, Madison Square Garden, which separated into two companies, Madison Square Garden Sports and MSG Entertainment, both of which, in our opinion, are trading significantly less than our assessment of their intrinsic value.


The Dolans control both entities through super voting shares, and while many people are hesitant to go into dual class shares, we think if you have the right partner, it’s something you can live with or we can live with. And oftentimes it gives you the opportunity to buy shares cheaply. So what is Madison Square Garden Entertainment? It owns the world’s most famous arena and other iconic venues. It has a really large cash position, valuable air development rights. That was an example of a hidden asset, as those are not properly reflected on the balance sheet and it’s also in the process of building the sphere.


So what is this Sphere? This is besides obviously covid, because this is an entertainment company, the sphere is what’s really weighing on shares of the company. The sphere is the venue of the future, which is going to be built in Las Vegas and most likely London. Building’s going to be about three hundred and sixty-six feet tall by five hundred and sixty feet wide, and we’ll have the world’s LCD screen, look it up on Google. Really cool.


The concepts. Terrific. I have no doubt that this will be a really cool arena if they’re able to execute. What gives us pause is the price tag at one point six dollars billion. That’s a very expensive proposition relative to the size of the company. In our opinion. They already have a great business. Why mess with a good thing? So despite the obvious near-term headwinds created by Corona, we’re quite bullish on live entertainment. This is an area that has grown nicely, and we think when the world gets back to normal, we think it’ll grow quite meaningfully.


There’s a lot of pent up demand. If you look at the company like Live Nation, you see that most of their tickets that they sold, pre pandemic, have not been refunded. People are just holding them for it for the future. I think once the world gets back to, you know, back to where it was, these venues will be eventually utilized quite nicely. And we believe there are multiple ways for shareholders to unlock value. MSG has a large cash balance.


It has a 350-million-dollar share repurchase program, remember, the entire enterprise value of the company is roughly half a billion dollars. They have valuable air rights that they could monetize. And we don’t think James Dolan likes being a public company, and we would not be surprised if he took the company private. It’s worth noting that Silver Lake, the private equity firm that is also in the live events space in a pretty big way, is an eight percent holder of the company.


Perhaps they partner on something in the future. Obviously, that’s speculation. But it wouldn’t surprise us. So here’s our valuation and how we got their current share price, I think is roughly sixty eight dollars and change. Discuss the risks which are coronavirus, but most importantly, the uncertainty over Las Vegas. And because of what’s going on in Las Vegas and the risks there, we took out about a 50 percent haircut to their cash balance over here.


I encourage you to go to this. You can just Google Jonathan Boyar, Forbes Dolan. It’s an open letter I wrote to James Dolan discussing why our firm thinks this fear is a bad idea. Maybe he  will listen to me. But probably not. The next company, Madison Square Garden Sports. Right now, you can buy the Knicks and the Rangers for essentially three point five dollars billion. You’re basically at these levels getting buying the Knicks and essentially getting the Rangers for free.


Plus, you have a decent cash board. They have E-Sports franchises and other investments. I think they’re going to be a big beneficiary on online gambling because of coronavirus. Everyone’s state budget is extremely stretched. And I think legalized sports gambling is just going to continue to flourish. And I think the NBA and MSG will all profit from this and as shareholders do it as well. It’s also interesting, and this is what we really look at and we try to get in the heads of the people doing these transactions that Madison Square Garden sports was structured as the parent.


This, from our understanding of the law, allows the company to be sold at pretty much any time without losing the tax-free nature of the spin offs. So right now you have two entities, Madison Square Garden Entertainment, Madison Square Garden Sports. And I think if the Knicks or Rangers or both ever were put on sale, there would be a line of billionaires around the block wanting to buy these things. And I think. It’s in our opinion, it’s kind of a question of time, whether it’s one year or two or three years, I don’t think James Dolan wants to own the Knicks and the Rangers.


Over the long run, sports franchises have gone up dramatically. He’s made a lot of money. He bought the Knicks for next to nothing. But he’s getting nothing but grief for owning these teams. And I think at some point he’s going to want to just end it. As I mentioned earlier, this sports rights have gone up in value really for two reasons. One, mobile gambling and two, live entertainment. Besides news, live sports is the only other place that people people watch live.


And the value of sports teams has continued to increase and there was a transaction just recently, look at Steve Cohen paid well over two billion dollars, in which two and a half billion dollars for the Mets, which is a mediocre team, and that’s baseball, when the team valuation for baseball are significantly less than that for basketball. And it just shows that when these trophy assets come up for sale, there will be buyers. And I see no reason why the same thing won’t happen for the Knicks and the Rangers.


And here’s how we got to our valuation for Madison Square Garden sports again at the end, it’ll have a link on where you can get you can get the presentation. So that’s the MSG  saga. Please feel free to email me with any questions later. And the next company is a name that everyone knows. It’s certainly a high-quality name that we think is very interesting. And Wall Street really hasn’t given it the credit it’s deserved. We came up with this idea in a recent issue of our research service and decided it was attractive enough to purchase for certain clients, as you know, Coke the largest non-alcoholic beverage company in the world.


Amazingly, their products represent two billion of the sixty one billion beverages served globally. And it switched its strategy in multiple ways over the past decade, it bought and then re franchise its bottlers and it took the company from asset heavy business to an asset like business. And this shift really helped with margins. But much of this improvement has been masked by the strong US dollar as most of their costs, their headquarters in Atlanta, our dollars, but there are a global company and their revenue is obviously many, many different currencies.


And as you are well aware, the world is shifting away from sugary drinks, so now they’re selling healthier beverages and for their unhealthy beverages, they’re kind of more packaging them as a treat and smaller packaging, which has helped increase margins substantially. And believe it or not, even with shrinking the packaging, they’ve been able to grow volumes every year by two point eight percent for the last 14 years, which is pretty amazing when you consider the headwinds facing that business in terms of sugary, the sugary snacks, etc.


. Coronaviruses obviously impacting sales for Coke, but we think Wall Street’s overreacting and much of his sales will come back and we think the operational improvements it a rerating of shares and believe they’re selling about forty nine dollars today. We think they’re worth probably sixty six dollars per share, which would be forty five percent upside when you include dividends. But even if the multiple stays the same, we still see 30 percent upside when you factor in dividends. While the stock certainly is cheaper, we think it offers a could get cheaper, we think at current levels and offers a very compelling risk for.


So the next company I’m going to discuss is another company you are all very familiar with Disney. My father always discussed how powerful the Disney brand was from an investment standpoint. But until I had children of my own and started to have to pay for all the Disney paraphernalia, trips, et cetera, I really had no idea what he was saying. Now I do. And Disney controls some of the world’s best properties, from Marvel to Star Wars to ESPN and of course, Mickey, Minnie and Goofy.


Disney has obviously been impacted due to the virus, but they have the balance sheet to withstand the shutdown of their business for a long time and we don’t think their overall long term business is going to change. You know, in prior covid, the box office performance was absolutely fantastic. They also bought Fox bring over them even more fantastic franchises like National Geographic, X-Men, Fantastic Four, Avatar, you name it, they brought it over. It was terrific.


But what we’re most excited about is Disney Plus, I have two young children. It’s the best six ninety-nine I spend. And this is in one way it has been it has actually helped them with this. They had thought that they were going to get 60 to 90 million subs for Disney plus by 2024. We’re obviously still in 2020 and they’ve already less than a year to pre after release, already have 60 million subscribers. This is much faster than Netflix.


Got to that number significantly. And we think this is a huge growth engine for the company. So using a sum of the parts valuation, we get to a one hundred and eighty three dollars per share, I think over time this could prove to be conservative, as I think that Disney streaming services is is quite powerful. And if you compare it to the value of Netflix, either Netflix is extremely overvalued or Disney is extremely undervalued or probably somewhere in between.


Well, I want to thank Charlie and the rest of Guru Focus for inviting me to participate. I hope to be able to join you soon in person and happy to answer any questions you might have. I’ll leave it open for questions. And just to let you know if you want a copy of this presentation, please go. Go here and we’ll have one sent to you. Feel free to follow us on Twitter. And one of the things I forgot to mention is I have a podcast that I’m very proud of called The World according to Boyar, and it’s something that you can listen to for free items.


Thank you. All right, well, thank you, Jonathan, for that amazing presentation. We’ll go ahead and jump in to some questions here. We do have a decent map built up over on you, YouTube, first and foremost. So, would you mind giving us an example of a recent special situation that you’ve been involved in after mentioning those in the presentation?



Yeah, I would be happy. Doing special situations are a really interesting and sometimes they can be quite frustrating, and you question yourself. But the one that comes to mind is that happened recently has to do with Qurate, which is a stock we’ve been following for quite some time. They own Home Shopping Network and QVC. It’s controlled by John Malone and John Malone, you know, good guy to invest alongside, but he does some kind of crazy thing, convoluted structures, et cetera.


And one of the things he did was recently he spun off too existing equity shareholders, a preferred yielding eight percent. The symbol, I think, is QRTEP. It’s eight percent through to 2031. But to give and it originally came out at one hundred and five dollars and quickly got down to the low, to the high 80s. And the reason for that and that that gives you over a nine percent yield when they’re comparable bonds were yielding seven, seven and a half percent.


And I think the reason for that is if you look at their shareholder base, their index funds or other companies that just couldn’t own the preferred, so they sold them indiscriminately. And that’s where active managers like myself can really take advantage of these situations. And that’s what we did. So it just to me just didn’t make sense. It quickly went from 88. I think now it’s back to 98. So you’re still below par. They can’t call it, I believe, for five years or so.


I think it’s an attractive security in this low rate world,


And we’ll keep things open here for a little bit longer while we do our closing. But any final thoughts, anything like that they’d like to put out there before we go ahead and close things out here?

No, I just want to thank you and Charlie for having me hereAnd if you have any questions, feel free to get in touch with me. I hope I answered your questions.


And, you know, thank you. Thank you again for having me. Definitely. And thank you for the great presentation and for taking the time to answer these questions. Our audience really does appreciate having guests on here that they can interact with and truly get involved.

They were great questions. I wish I could do it in person, hopefully next year. Absolutely. And for those out in the audience right now, a full recap video of this presentation, including the Q&A, will be available here shortly, both on our YouTube channel as well as on camera focused dotcom.


We hope everybody out there stays safe and stays healthy. And we look forward to seeing you next time with our next guests. So thank you again, Jonathan. And we are happy to have everybody here hanging out with us. Great. Thank you.

The statistical and other information contained in this presentation has been obtained from third-party sources we deem to be reliable, but we cannot guarantee its entire accuracy or completeness. If not noted, all sources of information originated/ contained within Boyar Research report.

The information presented is not intended to be an offer to sell or the solicitation of an offer to purchase any security or investment product. This presentation may not be published or re-distributed without the prior written consent of Boyar Asset Management Inc. Investors should bear in mind that past performance of any investments described herein are for illustrative purposes only and are not necessarily indicative of future results.

This presentation may contain, or may be deemed to contain, “forward-looking” statements, which are statements other than statements of historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future of investment results of the investments described herein may vary from the results expressed in, or implied by, any forward looking statements included in this presentation, possibly to a material degree. This material is for informational purposes only, as of the date indicated, is not complete, and is subject to change. Additional information is available upon request. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information and Boyar Asset Management assumes no obligation to update or revise such information. Boyar Asset Management is a SEC Registered Investment Advisor. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2 is available upon request or at  https://adviserinfo.sec.gov/

Boyar Asset Management, its employees and/or shareholders own shares in Coca Cola, Disney, Madison Square Garden Entertainment & Madison Square Garden Sports. The presentation represents the views of Boyar Asset Management as of September 30th 2020 and is subject to change at anytime without notice.


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