Amvona

Update: The Short Case for World Wrestling Entertainment

Shares of World Wrestling Entertainment (WWE) fairly priced between $8.25 and $11.88.

On March 17th, 2014 Amvona published Lemelson Capital Managements investment thesis "The Short Case for World Wrestling Entertainment".

The shares have lost approximately 26% of their value in the 16 trading days since publication. On April 7th, 2014 ValueWalk published "Amvona Short Call Sends WWE Tumbling" stating:

"World Wrestling Entertainment, Inc. (NYSE:WWE) shares were hammered today, briefly trading below $22 as news of Amvona/Lemelson Capital Management's report making the case to short WWE started to gain greater currency. The report was released almost three weeks ago and as of 1 PM ET today, the stock is down more than 20%. It's also worth noting that the Amvona fund was up 60% last year after fees."


Recent events point to further losses

 1.  Company already expects at least 12 M loss in Q1 2014

 2.  Forward P/E ratio of ~20 (based on estimates) highly speculative and not likely to materialize.  Trailing P/E ratio over 607.

 3.  Subscriber numbers announced on April 7th do not support costs of WWE network - therefore OTT network operating at an ongoing loss in addition to extraordinary start-up costs.

 4.  New subscriber acquisition will be difficult now that largest promotional event (Wrestlemania) is past.

 5.  Serious doubts exist that subscribers will continue subscription that exceeds the cost of other media streaming services such as Netflix post major PPV event.

 6.  Important footnote on WWE press release affirms:

"Current subscriber number does not account for potential failures to comply with subscription terms and six month commitment"

7.  The Underlying fundamentals of the company are not fixed and the same management team that has eroded earnings year after year still in place.

Conclusion

Despite recent drop in price, shares of WWE represent far too much risk, and continue to be at least 100% overvalued. Weakened financial profile likely to worsen in 2014, leaving company as nothing more than financial shell upon which to speculate.

DISCLOSURE

Lemelson Capital and its clients have no position in WWE.

SPECIAL NOTE REGARDING THIS REPORT

THIS REPORT INCLUDES INFORMATION BASED ON DATA FOUND IN FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INDEPENDENT INDUSTRY PUBLICATIONS AND OTHER SOURCES. ALTHOUGH WE BELIEVE THAT THE DATA IS RELIABLE, WE HAVE NOT SOUGHT, NOR HAVE WE RECEIVED, PERMISSION FROM ANY THIRD-PARTY TO INCLUDE THEIR INFORMATION IN THIS PRESENTATION. MANY OF THE STATEMENTS IN THIS PRESENTATION REFLECT OUR SUBJECTIVE BELIEF.

THE INFORMATION CONTAINED ABOVE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF WORLD WRESTLING ENTERTAINMENT MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED ABOVE SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN DECISIONS REGARDING WORLD WRESTLING ENTERTAINMENT AND ITS PROSPECTS BASED ON SUCH INVESTORS' OWN REVIEW OF PUBLICALLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED ABOVE. NEITHER LEMELSON CAPITAL MANAGEMENT, LLC NOR ANY OF ITS AFFILIATES ACCEPTS ANY LIABILITY WHATSOEVER FOR ANY DIRECT OR CONSEQUENTIAL LOSS HOWSOEVER ARISING, DIRECTLY OR INDIRECTLY, FROM ANY USE OF THE INFORMATION CONTAINED ABOVE.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this letter are forward-looking statements including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Forward-looking statements are not guarantees of future performance or activities and are subject to many risks and uncertainties. Due to such risks and uncertainties, actual events or results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Forward-looking statements can be identified by the use of the future tense or other forward-looking words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "should," "may," "will," "objective," "projection," "forecast," "management believes," "continue," "strategy," "position" or the negative of those terms or other variations of them or by comparable terminology.  Important factors that could cause actual results to differ materially from the expectations set forth in this letter include, among other things, the factors identified under the section entitled "Risk Factors" in World Wrestling Entertainment’s Annual Report on Form 10-K for the year ended September 28, 2013. Such forward-looking statements should therefore be construed in light of such factors, and Lemelson Capital is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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