PEJ's a Play on the Leisure Industry

As fans mourn Michael Jackson over the upcoming weeks, they will reflect on his music and the indelible impact that he left on the music industry. Despite the estimated $500 million in debt left by the singer, Jackson managed to stay afloat in recent years through a series of business deals and refinancing to supplement his $19 million a year in earnings. Jackson's 50% ownership of the Beatles catalog became an important financing tool as his debt mounted. Jackson sold 50% of his stake to Sony (SNE - commentary - Trade Now) in 2006, allowing himself to refinance approximately $300 million of his debt. Jackson's career and comeback plans are a testament to the power of the entertainment industry, which has bounced back in 2009 despite an uncertain economic climate.

Even in this recession, all 50 of Jackson's shows slated for this summer quickly sold out. While the economic downturn has crimped consumer spending, the PowerShares Dynamic Leisure and Entertainment (PEJ - commentary - Trade Now) ETF is up 17% year to date, rising nearly 25% in the last three months. PEJ's diverse portfolio includes television and radio broadcast companies, as well as recordings, musical instruments and owners and operators of sports arenas, gaming casinos, hotels and motels. While Jackson's success in selling out Anschutz Entertainment Group's O2 arena in London is certainly credited to his prolific career, the phenomenal sales -- despite economic recession -- can be viewed as part of a larger trend in the resilience of the entertainment and leisure industries.

PEJ, which is made up of 30 mostly small- and mid-cap holdings, has an average trading volume of about 43,000 shares. Because the fund's volume is light, prospective investors might achieve better prices with limit orders or small blocks of market orders. The top 10 holdings in the fund are Liberty Media (LMDIA - commentary - Trade Now), Priceline.com (PCLN - commentary - Trade Now), Starbucks (SBUX - commentary - Trade Now), Scripps Networks Interactive (SNI - commentary - Trade Now), McDonald's (MCD - commentary - Trade Now), Walt Disney (DIS - commentary - Trade Now), Yum! Brands (YUM - commentary - Trade Now), Darden Restaurants (DRI - commentary - Trade Now), BJ's Restaurants (BJRI - commentary - Trade Now) and Marvel Entertainment (MVL - commentary - Trade Now). PEJ also holds Warner Music Group (WMG - commentary - Trade Now), whose division Warner/Chappell Music owns publishing rights to some of Jackson's catalog.

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At the time of publication, Dion had no positions in the stocks mentioned.

Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.