RE:What are some helpful ways to learn about this industry? Not much in terms of resources Spence. It’s not some exciting tech space that many people would really know about. As stated in the interview, it is kind of a “tech supply chain” solution, connecting ad agencies and content producers to various broadcasters. Not something very exciting, and the area itself is not growing. Yangaroo’s potential growth would be via increased market share. The space has seen consolidation in recent years and is dominated by a few large players. Some would theorize that this presents and opportunity for YOO 1) as agencies look to diversify delivery options with multiple providers, and 2) size breeds complacency.
The award show business is a separate business, pretty much a monopoly. Not large by any means, but consistent and provides exposure and marketing opportunities with major music labels and movie studios (movie studios are a potential growth area as per their blog).
I do much of my research by myself, via internet search. More along the lines of general advertising news/trends, looking up competitors such as Extreme Reach, etc.
The main risk of the company in my eyes is the future trajectory of broadcast television/radio, and the effect on the addressable market size. I am a believer that live television will remain a staple in some capacity, albeit in a smaller role, largely delivered via internet such as Hulu LiveTv, YoutubeTv, etc and we will still have a place in this environment. Again, the pace of this transistion is not predictable. I have developed my investment thesis under a pessimistic assumption that the addressable advertising market will decrease from 250 mil to 150 mil long term. Again, I really have no clue if this is remotely accurate and it is likely verrry pessimistic, but it builds in a cushion. If YOO is able to grow a market share to 8-10% under this scenario, it will still be churning out a very large amount of cash relative to the current market cap. This is my thesis, and I believe that the risk reward setup is very favourable.
FYI I’m a long (ish) term shareholder of over 3 years.