Is $DIS Disney really just a HOTEL STOCK? Let's compare to $MAR

2017年11月7日

Here is a "pairs strategy" to go long DIS and short MAR over the course of the next 3-6 months AFTER earnings are released for DIS on November 9th.

I don't want to put you at risk for the current earnings report, but over the longer term, DIS tends to correlate very highly to MAR Marriott.

MAR has been on a straight line rally for many months now while DIS has been backing off and is more than 10% off of the highs.

If you can't keep yourself from standing in front of the oncoming train of DIS earnings which can have a major short-term impact on the stock, then try call options on DIS instead.

If you can handle a bad quarter and lose 5%-10%, then owning the stock is probably not too bad of a risk.

Ever since the sharp drop in DIS shares in early September, it has been a sideways share price, which to me implies accumulation is happening.

Just this week, the price of DIS climbed out of that range it has been in and that could just be shorts covering ahead of the current earnings report.

It looks to me that DIS will catch up to the rally in MAR and it will make sense to be long DIS and short MAR as a pair for the next 3-6 months.

Notice the bottom of the chart has a "CORRELATION" histogram of DIS to MAR over 253 days, which is a trading year. You can see that they typically correlate AND this is the lowest correlation that the pair has had in 7 years.

When something unusual happens like that, I take notice. Time will tell.

Best regards,

Tim

November 7, 2017 4:46PM EST
101.61 last DIS
120.89 last MAR

2017年11月9日

注释

Comments: The impact of ESPN is weighing on opinion of DIS due to the weak performance of the NFL this fall. ESPN viewership is down 5% this year so far and down 15% over the last 2 seasons. So, from what I can see the drop in ESPN was 10% last year and a smaller 5% this year. Zerohedge.com has an article out today pointing to DIS as a short sale as a result of Michael Lewis calling the NFL a short. ESPN used to be over 50% of DIS earnings as far back as 2012, but ESPN's viewership (homes with ESPN cable) has been declining each year since then according to research I found at seekingalpha.com.

There are other factors to add:
I'd like to consider the impact of travelers going to Disney properties instead of going to the Caribbean after the hurricane damage. Disney cruise ships are getting booked up faster than ever and I am eager to get more evidence from what I hear talking to travel agents (yes, they still exist) and fellow friends.

The added bonus and frankly the reason for finding this pattern in the first place, was the upcoming Star Wars movie is due out next month and theaters are selling tickets to the movie already. So, given that HOTEL OCCUPANCY is at its best level in over a decade (look at news this week), hotel stocks can benefit.

2017年11月9日

注释

Earnings announced-

2017年11月17日

注释

DIS did drop just shy of 5% in after-hours trading, then rebounded sharply and is up nicely. So, my point that DIS had 5%-10% risk when reporting earnings was useful.

Stay tuned: DIS looks constructive here.

2019年8月26日

注释

DIS caught up to MAR and closed the gap quite some time ago.