Research from Drawbridge Research, Drawbridge Research

Drawbridge Research

The team at Drawbridge Research believes that to take advantage of market mispricing a first principles understanding must be obtained on what a company fundamentally does, the purpose that gives that company a reason to exist, and how that company executes on serving its purpose and function.

Once a first principles understanding is obtained, we believe it becomes possible to discern real world fact from market fiction. A fundamental understanding, coupled with this separation, allows for an evaluation of a company’s inherent value that is not biased by market sentiment.

This approach requires significant qualitative research coupled with a detailed understanding of company financial accounts to understand what attributes drive and protect profitability. These two parts of Drawbridge’s research approach are not viewed separately by the research team but instead as two interdependent parts of a broad, exhaustive, and complete investment research process.

Price is equally paramount. This means that a company must be priced at a level where it offers significant growth in value, as our goal is to achieve outsized returns, not to simply collect quality companies. In addition to the upside potential, a company must be attractively priced enough to ensure the preservation of capital in the case our thesis turns out to be wrong.

Research from Drawbridge Research

Equity Bottom-Up

<p>This is the second of three research notes covering Sony Group. Part 1 looked at Sony’s semiconductor and electronics businesses and how they have both collaborated to redefine the interchangeable-lens camera market whilst both having their own idiosyncratic growth drivers. This note covers the company’s music business, the incredible behavioural biases currently affecting its perception and the first principles of digital and analog audio that lead to this perception. Secondly, the company’s pictures business is examined with an emphasis on the fact that Sony is the only major Hollywood studio to not have invested in its own streaming service. We show how this strategy to not pursue streaming has resulted in Sony being the sole major Hollywood studio able to supply exclusive content to streaming services, with all other majors unable to due to the fact they are competing with each other in the streaming market themselves. Finally, we look at how walls continue to be broken down between Sony’s business units whilst analysing PlayStation Productions, a collaboration between Sony’s music and gaming business. PlayStation Productions aims to leverage Sony’s extensive catalogue of renowned and maturing gaming IP into Film and TV adaptions, all at a time when exclusive content is commanding a premium price.</p>

This is the second of three research notes covering Sony Group. Part 1 looked at Sony’s semiconductor and electronics businesses and how they have both collaborated to redefine the interchangeable-lens camera market whilst both having their own idiosyncratic growth drivers. This note covers the company’s music business, the incredible behavioural biases currently affecting its perception and the first principles of digital and analog audio that lead to this perception. Secondly, the company’s pictures business is examined with an emphasis on the fact that Sony is the only major Hollywood studio to not have invested in its own streaming service. We show how this strategy to not pursue streaming has resulted in Sony being the sole major Hollywood studio able to supply exclusive content to streaming services, with all other majors unable to due to the fact they are competing with each other in the streaming market themselves. Finally, we look at how walls continue to be broken down between Sony’s business units whilst analysing PlayStation Productions, a collaboration between Sony’s music and gaming business. PlayStation Productions aims to leverage Sony’s extensive catalogue of renowned and maturing gaming IP into Film and TV adaptions, all at a time when exclusive content is commanding a premium price.

Sony Corp

Sony Part 2: Arms Dealer in an Arms Race