Stokes stalks Consolidated Media

The media has had fun speculating about Kerry Stokes’s raid on James Packer’s media investment company. Having followed the stock for some time, we've been pondering the likely end game and its implications for investors.

Recommendation
Stokes stalks Consolidated Media
View company profile for CMJ

Date 30 Jul 2009
Current Price $3.44

Buy
below
Hold
up to
Sell
above
Buy Hold Sell Meter
Business Risk
Med-High
Share Price Risk
Med-High

Being a self-made billionaire, you’d expect Kerry Stokes to know what he’s doing. His recent raid on Consolidated Media could be a genius move; but we don’t get it. To our minds it looks like yet another dubious application of shareholders’ funds.
Stokes’s Seven Network raided Packer’s Consolidated Media Holdings (which we’ll refer to as CMH, though its ASX code is CMJ) in early July, paying a total of about $300m for 19.9% of the media investment company. Then, in a response befitting a gaming mogul, Packer called Stokes’s bluff; ‘re-raising’ him by subsequently lifting his stake from 39.3% to 40.8%.
Non media mogul shareholders are probably enjoying the spectacle. After languishing below $2.00 in the early part of this year, CMH’s share price is up 41% since our last review on 17 Oct 08 (Hold – $1.96).

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