market folly

We're posting up notes from the Sohn London Investment Conference 2015.  Next up is Robert Harteveldt of Trishield Capital Management who pitched a long of New Media Investment Group (NEWM).


Robert Harteveldt's Sohn London Presentation 2015

Long New Media Investment Group (NYSE: NEWM) 

New Media is a newspaper publisher that utilizes a roll-up strategy buying small and medium sized local newspaper businesses.

NEWM owns 575 publications in total, 125 daily publication and 490 related websites EV multiple 2015 6.3x; FCF 17.9%; Dividend 7.3%. NEWM will pay no income tax for the foreseeable future. Revenue and FCF has been growing over the last 3 years. New Media is managed by the private equity arm of Fortress Investment Group.

No one wants to touch newspaper businesses because of the challenge from digital media. Total newspaper circulation in the US has fallen from 51m in 2007 to 44m in 2010. However, Harteveldt argued that if you know where to look you can find thriving newspaper businesses. Newspaper circulation sales trends have stabilised. Small, local papers are here to stay and are sustainable. People need local news and local papers are the main way to get it – school news, obituaries, police blogs etc. There are few alternatives.

Trishield specialises in looking for businesses that are going through a hard time but are misunderstood by the market. New Media’s digital revenues are growing. They receive strong revenues from local advertising.

NEWM have made ten acquisitions since 2013. They will need to acquire $200m more small and medium sized newspapers in the future to hit their targets. This can be achieved via internally generated funds without the need for a rights issue. They make cost savings at newly acquired businesses by centralising administration and raise revenue by raising prices strategically.

Be sure to check out the rest of the Sohn London Conference presentations.