A Hollywood Come Back

by David Jenyns on February 9, 2009

Motion picture stocks have made a comeback in recent years. By hidden asset value, Wall Streeters mean, among other things, the film libraries of post-1948 features, which movie makers had already written off the books. Per-share asset value of the Fox stock was estimated at over $70 as of Sept. 15, 1960, against only $37.69 at the1959 year-end.

Quite a few other movie makers, including Warner Brothers and Metro-Goldwyn-Mayer, have bought their own motion picture stocks on the open market to increase the value behind each of its shares. In the case of Warner Brothers, asset value per common share rose from $23.36 in fiscal 1958 of fiscal 1959’s $31.80. Solid asset values are also found behind most theater companies’ motion picture stocks. At fiscal 1959 year end, value per common share stood at $22.54, as compared to a considerably lower market price for its motion picture stock during that fiscal year.

Though a company’s book value or asset value has become less and less a factor in determining the market value of its stock, assets are important if they are relatively liquid in content.

Paramount’s “other asset” value per common share alone was estimated at between $50.85 and $60.20 against the stock price then, approximately $52.50.

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