GAMCO Investors raises its position in Interpublic Group
Highlights of 3Q positions for GAMCO Investors (Part 9 of 10)
GAMCO raises stake in Interpublic Group
GAMCO Investors increased its position in the Interpublic Group of Companies Inc. (IPG) during the quarter that ended in September 2014. The position accounted for 0.56% of the fund’s 3Q14 portfolio.
Interpublic Group Overview
In terms of revenue, Interpublic Group is the fourth-largest advertising firm globally. The firm ranks behind WPP plc (or WPPGF), Omnicom Group Inc. (OMC), and Publicis Groupe (or PUBGY). IPG owns the following media-related agencies, among others:
McCann Worldgroup
FCB (Foote, Cone & Belding)
Lowe and Partners
R/GA
Huge
MRM//McCann
Weber Shandwick
Golin (formerly GolinHarris)
Initiative
UM
Both IPG and Omnicom are members of the Consumer Discretionary Select Sector SPDR ETF (XLY) and the PowerShares Dynamic Media Portfolio ETF (PBS). PBS provides exposure to an index of media stocks.
IPG has two reportable segments—Integrated Agency Networks and Constituency Management Group.
Interpublic Group sees push for sale
Market Realist reported in July that Elliott Management Corporation disclosed an activist position in Interpublic Group and is pushing for a sale of the company. Unconfirmed news reports said that Elliott might be encouraging IPG to sell itself to a peer company like Dentsu Inc. (or DNTUY), France’s Havas (or HAVSF), or Publicis. Please go here to learn more about Elliott’s activist position.
IPG shares have rallied on speculations of it being a takeover candidate. This has been especially true since May, when Omnicom and Publicis terminated their $35-billion proposed merger.
IPG posts revenue growth driven by net client wins
For 3Q14, IPG reported a revenue increase of 8.3% to $1.84 billion and an organic revenue increase of 6.3%. Net income was $89.7 million, resulting in earnings of $0.21 per basic and diluted share. This is up from net income of $45.4 million or $0.11 per basic and diluted share in the year-ago period.
IPG said organic revenue grew across almost all of its markets. The increase was driven by net client wins and net higher spending from existing clients, most notably in the health care, retail, auto, and transportation sectors. The firm saw a modest decline in the consumer goods sector. Growth across most disciplines—but mainly at advertising, media, and digital specialist agencies—drove the organic increase in the US.
IPG management said, “The performance we are reporting today puts us solidly on track to achieve or exceed our full-year targets of 4% organic revenue growth and an improvement in operating margin of at least 100 basis points to 10.3% or better.”
Other 3Q14 activities at GAMCO
Mario Gabelli’s GAMCO Investors added new positions in Weatherford International, TRW Automotive Holdings Corp., and Liberty Media Corporation Class C in the third quarter. The fund also acquired stakes in Sigma-Aldrich Corp. (SIAL), Concur Technologies Inc., and Bally Technologies Inc., all three of which are currently involved in merger and acquisition transactions. GAMCO added to its positions in Sony Corp. ADR and Chemtura Corporation as well.
The next part of this series will highlight GAMCO’s position change in Chemtura Corporation .
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