I think it's oversold...certainly relative to LEE and GCI....and that a move back up towards $2 seems more likely than not, after the earnings release.
They are not anywhere near bankruptcy, based upon the bank maturities going forward, and the underlying cash flows. And with Buffett's flirting with LEE, and my personal opinion that MNI is now more attractive than LEE, I think the smart play is to assume a rebound here, after the earnings release...rather than a plunge back to the lows of $1 or $1.25, from late last year. (I'll certainly be buying more aggressively, if it drops on the earnings release...unless there's some kind of fundamental change in my view of things.)
It may not be a buy at $2.50 or higher....but it certainly is at $1.55.
News and longtime,
You both might enjoy reading Bill Gross' most recent Pimco letter. He specifically questions pension return assumptions and the long run return on equities. He too refers to the recent law change which MNI touts as to their advantage as a "gimmick " and a "trick"; the future appears dark and stormy. Buckle up.
Page 61 of the 10k. 8.25% is their assumption. Not that different from many companies but scarier when you consider the huge unfunded liability of MNI. Unless Ben prints big $s, or there is a paradigm economic shift, their optimistic assumption is especially dangerous in light of the secular decline in newspaper ad revenue.
I think MNI still assumes an 8.25% return on their plan which is underfunded by ~$500 million. For a small and shrinking company the amount is atrocious. We the taxpayers will pick up part of the tab if this thing goes bust. Yet, you favor lower contributions? The hole just gets deeper. Should we pray for Helicopter Ben to print more trillions?
Good call. But I would sell the news. Fall in operating cash flow will eventually result in problems. Lots of one time pluses. Ad spending still decreasing. And the pension forgiveness is just accounting gibberish if the global economy stays weak for an extended period.
I disagree with your overall bearishness, except for expected continued declines in revenues, which ARE a problem. But I Especially disagree with you on the pension stuff.
The stock should see $2.00-2.25 again. Short covering would certainly help. But I may start lightening up today, owing to margin call due Monday. (I only own 40K or so shares here, so I'm not going to overwhelm the market.)