Buying the Dip in ViacomCBS (VIAC) and Sold Pfizer (PFE)

posted Mar 27, 2021, 12:21 AM by Intelligent Investor   [ updated Mar 29, 2021, 12:09 AM ]
A very big opportunity came today to buy ViacomCBS (VIAC) at a ridiculously low price. Unfortunately we had to sell Pfizer (PFE). Pfizer has been a big disappointment for us. The stock didn't budge too much in spite of making billions in COVID-19 vaccine. We got bored and just swapped Pfizer for ViacomCBS.
We've been accumulating ViacomCBS (VIAC) for the past year and the stock has dropped 40% over the past few days. We took this as an opportunity to buy more as well as get out of our losing trade Pfizer (PFE). The fundamentals of ViacomCBS' business is still intact. During the last quarterly report, the company announced the following:
  • Accelerated Domestic Streaming and Digital Revenue Growth to 72% Year-Over-Year
  • Grew Global Streaming Subscribers to 30 Million
  • Grew Pluto TV Global Monthly Active Users to 43 Million
  • Grew Domestic Streaming Subscribers to 19.2 Million, up 71% Year-Over-Year
  • Grew Pluto TV Domestic Monthly Active Users to 30.1 Million
  • Revenue Rose 3% Year-Over-Year
  • Beat Earnings Estimate $1.04 vs. $1.02 in the 4th quarter

As far as we are concerned, the company's Global Streaming Ambitions are firing on all cylinders. But yet the stock was pummeled downwards, so we took notice. The P/E ratio at today's close is at 12.3 and the dividend yield is now at 2%. Based on the valuation and the company's very positive financial report, it's a no brainer to buy on this dip!

In Benjamin Graham's book, the Intelligent Investor is wiser to form their own ideas of the value of their holdings, based on full reports from the company about its operation and financial position. There has not been any company reports nor news that has said the fundamentals of the company is deteriorating. We believe there will be 2 streaming TV providers that is set to dominated the future of television. One of them is ViacomCBS (VIAC) and the other is Disney (DIS). The company is still on track to dominate the global streaming TV market. They have not made any announcement that says otherwise, like nothing that says their plans have been derailed. Any company announcement over the past few weeks have been very positive.
Any news that have been dominating the headlines over the past few days has NOT come from the financial statements of the company. It's just mere opinion and panic. So yes, please, Mr. Market, since you've quoted us a ludicrously low price for ViacomCBS (VIAC), as an Intelligent Investor, we will be more than happy to take your shares in away from you!

Updated 3/28/2021:
News came out this weekend that the record drop in ViacomCBS (VIAC) share price was due to a hedge fund going bankrupt. Apparently, the sell-off in VIAC this past week was NOT REAL, like I have mentioned above, the company's fundamentals are still intact. Some hedge fund named Archegos Capital screwed up and was forced to sell all of their VIAC holdings as well as other stocks. They flooded the market with 30 Million shares of VIAC. We expect the shares of VIAC to go back up to $100/share, right where it was, just before the sell-off started, maybe by April or May, or maybe even sooner. We smell cash money buying into this dip. The Intelligent Investor wins again!
Disclosure: We own shares in ViacomCBS (VIAC) and we no longer own shares in Pfizer (PFE).
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