The Right Thing, Overlooked

 | Nov 05, 2012 | 2:28 PM EST  | Comments
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Maybe it was the storm. Maybe it is the election. Whatever, we have some stellar news that's just being processed incorrectly by the market or is only just now getting its due.

The most obvious of these is Disney's (DIS) purchase of Lucasfilms for $4 billion. I thought this was perhaps the greatest stroke of genius yet for CEO  Bob Iger and that includes the brilliant Marvel Entertainment buy a few years back. Immediately Disney's stock got hit because the deal wasn't accretive. Contrast that with the immediately accretive purchase of Warnaco by PVH (PVH), which caused PVH to go to $113 from $91.

Now, I am not denigrating the market's reaction to the PVH deal, especially considering that PVH made fortunes when it bought Tommy Hilfiger not that long ago.

But people are totally overlooking what Disney can do with Lucasfilms. First, the franchise can produce multiple films that sell worldwide. Remember, it is incredibly easy to do a line extension and spinoffs, particularly with Star Wars, but to create one from scratch, a la John Carter, is fraught with difficulty.

Second, consider how much hay Iger's made with his purchase of Pixar, again, something that was originally perceived as an overpay as Lucasfilms was regarded just last week. Any reader of Walter Isaacson's amazing biography of Steve Jobs knows the clarity of vision both Iger and Jobs possessed about what could be done with Pixar. Iger understood that Pixar was capable of producing hit after hit including many that were on the drawing board when Disney bought the company.

Third, I recall when Disney bought Marvel and people, again, thought that that Iger paid too much. It only took a couple of movies to make it back and The Avengers to hit it out of the park, Again, though, Disney's only scratched the surface of the stable of characters Marvel has.

But it is the back half that has me even more intrigued. I was always looking for a new excuse to go to Disney because I loved taking my kids there. New rides always drove the trips. Now with this acquisition, you don't just get a new ride, you get a whole adjunct theme park with huge merchandising possibilities.

It wasn't just Disney's buy of Lucasfilms that was overlooked. I was awestruck by how well Kellogg (K) did this quarter. They have taken Pringles and run with it to develop a very fast growing snack division. But the seller of Pringles, Procter & Gamble (PG), had also recently produced a quarter that was nothing short of shocking in its break with the recent negative past.

Finally there is Ford (F). I thought Ford delivered an excellent quarter with huge profitability in North America, a taming of commodity prices and very good results out of Asia Pacific and Latin America. Meanwhile, it has taken aggressive action to fix the black hole that is Europe and it will be Alan Mulally who will do it. The job's not finished. He will do it just as he did with the United States.

Disney, Kellogg, Procter  and Ford. All doing the right thing. All being overlooked. It's never too late to fix that, though. All you have to do is buy 'em.

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