We recently met with the management of one of our larger small-cap holdings, DHX Media, to discuss its results and current business trends. From an operational perspective, the company is delivering on the integration of Cookie Jar Entertainment, which it acquired last fall, and has in fact increased its target for synergies. On top of this, it appears that the pendulum is swinging back to content being king with the proliferation of video services (Amazing, iTunes, Netflix, etcetera). We expect this will create many business opportunities for DHX.
In our view, the valuation for DHX remains attractive at around 7x our estimates of forward EBITDA. We think the most recent quarterly results demonstrate the benefits the company is seeing from digital distribution of their content and the dividend shows management's comfort in cashflows going forward. It continues to be a large positon across a number of funds.