Israel “Izzy” Englander founded Millennium Management decades ago, taking the firm from $35 million to now $34 billion in assets. He personally has a net worth of $5.2 billion; making him the 303rd richest man on the planet. In the fourth quarter, Englander initiated new positions in two buzzing stocks: Alibaba Group Holding Limited (NYSE:BABA) and Helios & Matheson Analytics Inc. (NASDAQ:HMNY). Englander’s trades are closely tracked by investors around the world keen to replicate his successful trading strategy.
The son of Polish immigrants, Englander boasts managed to bring in a 13% return for Millennium seven years ago, and achieving a 6% rise one year later. The billionaire’s firm has since outperformed a great deal of its competitors. The funds philosophy involves a global multi-strategy investment approach, which it says is “opportunistically engaged in a broad array of trading and investing strategies across a wide group of diversified managers.”
Now let’s dive in and take a closer look at where Englander is betting his billions right now:
Alibaba Group Holding Ltd
In Q4, Englander swooped into BABA with the purchase of 311,854 shares. His new stake shares in this Chinese e-commerce giant is worth about $53.773 million.
Alibaba is the largest online and mobile commerce company in the world by gross merchandise volume (GMV). Englander’s latest move gives him an entry into BABA’s diverse ecosystem which spans everything from the cloud and payment processing to retail stores and entertainment. And right now its Alibaba’s entertainment prospects that are hitting the headlines. Alibaba has just announced a deal that will make it the largest distributor of Disney animated content in China.
The new licensing deal between Alibaba and Disney will enable Alibaba to stream more than 1,000 animated Disney episodes and movies on its Youku streaming video service and other platforms. The deal includes series like “DuckTales” and “My Friends Tigger and Pooh” and gives Alibaba the exclusive right to 600 episodes for the first two years. In addition, Alibaba will also receive licensing rights to 100 films from the Disney back catalogue, including popular classics like “Beauty and the Beast,” “Mulan,” “Frozen” and “Pirates of the Caribbean.”
Disney’s previous streaming video service, DisneyLife, shut down in China just five months after launch, apparently at the request of China’s regulators. However, by partnering with a Chinese company, Disney now has a second chance to make it big in China. Indeed, the new deal will give the Mickey-Mouse creator access to over 30 million Chinese households. According to Alibaba, Youku currently boasts about 1.2 billion views each day
On the news Youku president Yang Weidong said “The addition of Disney content greatly enriches the library of quality international content on Alibaba’s media and entertainment ecosystem, giving us a leading edge in foreign content distribution in China.” The financial terms of the deal have not been disclosed.
Overall, in the last three months, BABA has a ‘Strong Buy’ analyst consensus rating with no less than 18 consecutive buy ratings. Meanwhile the average analyst price target of $229.71 suggests big upside potential of 25 percent from the current share price.
Helios and Matheson Analytics Inc
Englander also initiated a new position in IT services firm Helios & Matheson with the purchase of 156,768 shares worth $989,000.
HMNY is a very interesting investing proposition right now because the company is the majority owner of MoviePass. Indeed, Helios ramped up its holding in MoviePass last week to 78%. For the increase in ownership, Helios paid MoviePass $45,525,000. Fast-growing MoviePass is a movie-theater subscription service that provides film enthusiasts the ability to attend up to one movie per day for just $9.95/ month. The service, now accepted at more than 91% of theaters across the US, is the nation’s largest theater network.
“Helios’ capital investment has fueled our growth to approximately 2 million subscribers and enabled us to move closer to our vision of transforming the movie industry,” said MoviePass CEO Mitch Lowe on the announcement. “Our goal has always been to drive more people to the movies, while reinvigorating the entire ecosystem that includes theaters, studios and distributors. Our relationship with Helios makes that possible.”
In the last three months, HMNY has only received one rating from the Street. This is a buy rating from Maxim Group’s Brian Kinstlinger with a price target of $25. Given that the stock is currently trading at just $4.74, this suggests insane upside potential of over 420%. (To watch Kinstlinger’s track record, click here)
“Much faster-than-expected subscriber growth has put MoviePass in a position of strength sooner than we had originally expected” writes Kinstlinger. He has a very optimistic outlook on the potential for HMNY and states that “with 2-3 million subscribers in sight, we believe theaters and studios alike will be hard pressed not to partner with MoviePass (and profit share). With the ability to push particular movies and theaters, we believe the theaters will want to partner with MP.”
He believes that as a result, theaters where the MP card is not permitted for use will lose market share, which could lead to negotiations on discounted pricing and rebates. MP currently has six partnerships- and has just begun to flex its muscles by excluding certain AMC theaters from its platform. These AMC theaters are in high profile and high-priced cities like New York, Los Angeles and Boston- but Kinstlinger is confident that because of the value MP offers the churn will be minimal.