The recent slide in home entertainment titles has been overdone.That’s why we buy more

We will continue to carefully monitor SVB Financial Group(SIVB) Silicon Valley Bank closed by regulators, the FDIC swooped in to protect insured deposits. It’s an ever-changing situation, with frequent news updates, so it’s nearly impossible to make a definitive judgment on whether the broader market will be affected, or whether the situation will affect how much the Fed expects to raise rates at its meeting later this month .

Meanwhile, we did have good news on jobs on Friday morning which, combined with SVB uncertainty, could push the Fed back into the 25bp hike camp. The employment report for February showed that the economy added 311,000 nonfarm payrolls — more than expected, but not as strong as January’s surge. There were also negative revisions in the previous two months. More encouragingly, wage growth wasn’t as hot as feared. Rising wage growth has been one of the main reasons for red-hot inflation.

With Treasury yields retreating on all this news, we’re looking at the ashes of the recent market correction for opportunities in quality companies that have been battered recently. A cash position of close to 9% allows us to find something to buy, which is what we did on Friday afternoon.

The location we decided to add is disney. Shares of the iconic media and parks giant have fallen about 15% since then. report earnings While CEO Bob Iger’s turnaround plan was a hit in February, the details were well received. Iger moved quickly after returning as CEO, offering a roadmap for balancing growth with profitability. This sell-off seems overdone to us.

Iger’s strategy is structured around three main features.

• The first is restructuring the company to put creativity back at the center of operations. Under the Chapek regime, Disney under-monetized its content, and a complete overhaul was necessary to return to the old ways to make the business more efficient and cost-effective again.
• The second is a cost savings target of $5.5 billion, of which $2.5 billion is non-content costs. Over the years, Disney’s cost structure has become too large and unsatisfactory. Realizing these savings will improve profits and returns.
• The third is the clarity of the dividend, which Disney has not paid since the early days of the Covid pandemic in spring 2020. On the earnings call, Iger said he plans to ask the board to approve a return to a “modest” dividend by the end of the year.

Iger spoke further about his turnaround plans at the Morgan Stanley Technology Media and Telecom Conference on Thursday. The market is likely to react negatively to some of Iger’s comments that the theme park’s pricing strategy may be too aggressive, and the company will seek to make its brands more accessible. But lower prices and less crowding at parks should improve the overall visitor experience and keep consumers happy with the brand. While the parks division’s profitability may have peaked, it’s all a huge balancing act, as streaming losses only get better from here.

Disney’s strategy is shifting from a streaming model of chasing subscriber growth to one more focused on profitability. We wouldn’t be surprised to see more price increases going forward because the value proposition is high and the product is undervalued to begin with. Additionally, we were pleased to hear Iger highlight the revenue growth opportunity for licensing content to third parties. It’s something Disney has given up over the past few years to support streaming subscriber growth on its own platform. But Iger realized that licensing was an important source of income.

Bottom line: The turnaround won’t happen overnight, but Disney is on the right track to improving profitability and expanding margins. That’s why we’re happy to add to our position on the recent dip.

(Jim Cramer’s charitable trust is long DIS. See here Complete list of stocks. )

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