Corus Entertainment $CJR-B is yet another example of why buy and hold doesn't always work out. There was a time where Corus Entertainment, home of Global News, was one of Canada’s powerhouse media conglomerates. But after years of people choosing streaming over traditional TV and a heavy debt load this company is a shadow of what it once was. If you look back at their history for nearly 20 years they pushed dividends to the shareholders but it was also this dividend that flashed warning signs. In 2017 the dividend yield was around 8% by the end of 2018 it had ballooned to over 30% as the share price collapsed. They started cutting the dividend and by Oct 2023 they had fully suspended the it. Now the stock is hovering $0.03 and they are restructuring the debt creating a new company and calling it NewCo. In an attempt to fix their failing business ( my opinion) they turn to the capital markets. They will take roughly $500 million of their 750 million in senior unsecured notes and convert that into equity. The creditors that accepts this deal will get 99% of the new company the existing shareholders will be hit with a massive dilution event as they will effectively own just 1% of the new company. Current shareholders will receive 1 share of NewCo for every 500 Corus shares they currently own after the reverse split. A crushing blow to anyone that held on to this company and yet another in an endless line of examples of why you can never assume a company will continue to pay dividends, or that it will retain its long term value. When we look at publicly traded companies that have been around for decades, it can give us a bit of survivorship bias. Looking at a study that examined thousands of companies, the research found that the historical half-life of a publicly traded company across sectors was about 10 years. Food for thought on a Friday. https://royalsocietypublishing.org/rsif/article/12/106/20150120/35571/The-mortality-of-companiesThe-mortality-of
96 views
0 Comments
No comments available.
Join the conversation with 500,000+ other investors 💸
Create an account to get access to everything Blossom has to offer!
📊 Personalized algorithm based on your investing style, experience level and interests
📈 Powerful portfolio and dividend tracking tools
👀 See what top creators and others in the community are investing in
