Lionsgate Entertainment: Misunderstood, Too Cheap to Ignore

Lionsgate Entertainment (LGF) is the most misunderstood media company on the planet and I present here my reasoning and analysis on why I think the shares are particularly cheap and why I believe they will appreciate in value over the next few years, despite remaining in a tight range over the past 3 years. For disclosure, I have been a long time bull on Lionsgate, which has been dead money for the past 3 years. I think LGF is ready to break out of this trend, and that is why I have decided to put my thoughts to words.

For overview purposes, Lionsgate is a producer and distributor of original and purchased content. In the past 5 years, LGF has amassed an enormous library of content to distribute: according to its most recent proxy, as of March 31, 2008, LGF distributes a library of approximately 8,000 motion picture titles and approximately 4,000 television episodes and programs. Lionsgate refreshes this massive library with about 18 to 20 new box office pictures per year, approximately 80 direct-to-dvd movie features, and countless new television episodes, including Showtime’s hit series Weeds, AMC’s new award drama Mad Men, ABC Family favorite Wildfire, USA’s former top show The Deadzone, NBC’s new horror anthology Fear Itself and coming soon to Starz, Lionsgate’s Best Picture winning Crash is being adopted for a new tv series. These titles are just a few of what LGF puts out each year, and will be discussed later on.