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15 May | Purchase – Entertainment One

With an abundance of cash – well, for me anyway – sitting in our trading account following sales of West China Cement and Renesola, I thought it time to set some of it free. Put it to work.

Following a nudge from an Investor Trader reader a few months back now, we’ve been keeping an eye on Entertainment One (ETO.L). After Small Company Sharewatch (our absolute fave small cap tip sheet) featured them in their May 2010 edition, we decided is was time to take an even closer look.

Entertainment One is a leading independent entertainment group, with diversified operations incorporating film, television and music across five territories (UK, Canada, US, Holland, Belgium)

On the film side of things (which it is estimated, represents over 50% of the groups overall operating profit), Entertainment One acts as a third-party distributor for producers that lack the size to facilitate their own world-wide distribution. Think smaller indie films rather than your Avatars and Titanics.

After a detailed screening process, Entertainment One takes on the role of distributor for those selected titles, utilising their operations in North America and Europe.

In exchange for distribution and fronting production cash, Entertainment One receives a percentage of the film’s rights. This tends to include not only the cinema takings, but TV, DVD and digital rights into the future.

Add to the film arm a smaller record label and a burgeoning television business (with the income potential from intellectual property rights that childrens television in particular throws up) and a healthy history of geographical diversity through acquisition and Entertainment One gives off all the right vibes of an entertainment company on the move.

Which brings us neatly to the over-riding reasoning behind our decision to take a little dip in the Entertainment One pool. Although currently trading on AIM, Entertainment One has Full List aspirations.

So yep, we jumped in, taking up 2,267 of these little beauties at £0.61 a pop for a total outlay of £1,382.87 before costs on 11th May 2010.

As always my ramblings are those of an amateur and should never be viewed as investment advice. Always do plenty of your own research and get your information from a variety of sources. Thanks again for dropping by.

Paul
rsvp@investorsoiree.co.uk