Looks like Blue Mountain Capital reduced about 146,000 shares of there 4,000,000, Q investments reduced 131,000 of their 1.2 million and Merill sold 868,000 shares of their 1.5 million. Allen Holding doubled their position to 600,000 shares. Tough to say what this all means and seems to me this stock is extremely illiquid for most institutions to take a sizable position long or short.
Longtimefollower - what's your thesis on the stock and valuation as we stand now? Do you think it is an acquisition candidate?
My thoughts are if they can refinance their existing debt and finish 2013 strong they could potentially trade at call it a 20% discount to their comps to be conservative.
Mean of comps is 9.0x LTM EV / EBITDA (Beasley 9.3x,, CC Media 10.9x, Cumulus 10.2x, Emmis 11.7x, Entercom 7.7x, Entravision 9.9x, Gray Television 7.5x, Journal Communications 6.7x, Salem 10.1xx, Spanish Broadcasting 7.8x).
Apply a 20% discount = 7.7x (ROIAK has averaged 8.8x since Dec 2007 with a high of 13.7x while the comps have average 9.3x during this same time period).
ROIAK last twelve months EBITDA = $157.5M
Implied enterprise value of 7.2x multiple = $1,134M
Less: Net debt outstanding of $772M
Less: Minority Interest of $222M
= Equity value of $139M
Divided by Shares outstanding of 47.9M
= $2.91 per share (27% upside)
Now it gets interesting that if you sensitize the multiple to just a 15% discount to the comps (7.7x), you get an implied equity value of $210mm and a share price of $4.38. So as you have mentioned before, due to the leverage the equity value is extremely sensitive.
Granted, my analysis here is based on multiple expansion and not future earnings expansion but based on the earning transcripts I hope you are going to see EBITDA ramp and the LTM numbers continue to increase.
I wish there was more research coverage on the stock and would love to hear others thoughts here and if I'm missing anything.
I do NOT believe they are an acquisition candidate, by the way. Too many shares are closely held, so this thing is controlled by management, and the stock has run up too much, probably, for the management to be able to afford to take it private. I think .
I haven't done any sophisticated analysis like you have. But I'd like to think you're in the right ballpark. This is a high beta situation, and there's more risk at $2.30, than there was at 70 cents. But then again, I might feel different, if they get a debt refi off.
The possibility of their eventually buying all of TV One is also interesting. Will the Street view us as more of a "growth player," at that point, and accord an even higher multiple than you are talking about? The potential could be pretty explosive. But we also need radio revenue to keep growing...ideally in the mid single digit percentages, to get the kind of "killer" returns we are looking for here.