Coronavirus is real, but so are the market opportunities

I haven’t seen a great primer on how COVID-19 impacts the businesses underlying stocks, so I’m putting down my thoughts here.  Some key points:

  1. It is now pretty clear that it will disrupt the economy.  Even if governments do not implement extreme measures, many consumers will.  Most people will not go to retail stores and cinemas, causing them to have so few customers that they might as well close down.
  2. The virus has been successfully contained in China, South Korea, Hong Kong, Taiwan, Singapore, and Macau.  These countries are working towards easing their restrictions and having life return to normal.  In those countries, the worst has passed.
  3. Practically everywhere else, the virus is quickly spreading and is not being contained.
  4. The world is not ending.  This is not the Spanish Flu and even that calamity did not cause stock prices to fall.

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LSXMA is trading at a discount

Liberty SiriusXM Group (LSXMA/B/K) is trading at roughly a 27% discount to its NAV.  The latest investor presentation discusses the discount:

As LSXMA is actively taking advantage of the discount by buying back shares, the discount should resolve in due time.  In the past, LMCA traded at a discount to the DTV (DirectTV) shares that it owned and that trade worked out well.

My Google Sheets calculations are here (it is updated with LSXMA/B/K’s latest share prices).  Use File –> Make a copy to edit it.  I own LSXMA shares.  This is a bet on the NAV discount narrowing as well as a bet on Sirius XM (SIRI) itself.

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