Is The Arena Group Holdings (AREN) Fairly Valued Now?
180 Degree Capital Corp., an investment management firm, recently released its second quarter 2023 investor letter. A copy of the same can be downloaded here. The quarter was rough for the portfolio, which lost 5.8% compared to a 5.3% increase for the Russell Microcap Index. In addition, please check the fund’s top five holdings to know its best picks in 2023.
180 Degree Capital highlighted stocks like The Arena Group Holdings, Inc. (NYSEMKT:AREN) in the second quarter 2023 investor letter. Based in New York, New York, The Arena Group Holdings, Inc. (NYSEMKT:AREN) operates a digital media platform. On August 17, 2023, The Arena Group Holdings, Inc. (NYSEMKT:AREN) stock closed at $4.2700 per share. One-month return of The Arena Group Holdings, Inc. (NYSEMKT:AREN) was 4.40%, and its shares lost 58.06% of their value over the last 52 weeks. The Arena Group Holdings, Inc. (NYSEMKT:AREN) has a market capitalization of $93.936 million.
180 Degree Capital made the following comment about The Arena Group Holdings, Inc. (NYSEMKT:AREN) in its second quarter 2023 investor letter:
“We believe we have a group of highly valuable, and yet low valued businesses that are struggling to generate performance on a day-in-day-out basis. I am convinced better days are ahead for our companies and that the activism we have done (some external and some internal) will reap rewards over time. I talked above about how in this market, many of our stocks have not moved in lockstep with their improving fundamentals.
The Arena Group Holdings, Inc. (NYSEMKT:AREN) is another one: 1. In a challenging ad environment, AREN continues to execute better than its peers with growing revenue and $100 million improvement in EBITDA. Result: AREN’s stock goes down. 2. In July 2023, the Wall Street Journal noted that Group Black is in talks to buy a stake in the company. Result: AREN’s stock increases briefly, but then resumes its decline. 3. AREN’s largest stockholder (and coincidentally largest debtholder) purchases over $1 million of AREN’s common stock in the open market. Result: AREN’s stock goes down.
Why has AREN’s stock been so weak? The only reason we can possibly come up with is that AREN has a material amount of debt on its balance sheet that technically comes due at the end of 2023. That debt is held by AREN’s largest shareholder, B. Riley, who has been purchasing common stock in the open market during this period of price weakness. Does anyone think that B. Riley would be purchasing common stock if it did not plan to renegotiate the debt and be the strong continued supporter of AREN and its common stockholders asthey have always been? Are investors naïve?
The stock has cost us nearly a $1.00 drop in our NAV over the last year, and currently trades at a price that makes little sense to us. Will this decline change direction? We believe it will. When will it change? We don’t know, but we do think it will happen sooner rather than later. Value almost always wins out at the end of the day if investors have the ability to weather these weak periods.”
Copyright: zefart / 123RF Stock Photo
The Arena Group Holdings, Inc. (NYSEMKT:AREN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held The Arena Group Holdings, Inc. (NYSEMKT:AREN) at the end of second quarter which was 2 in the previous quarter.
We discussed The Arena Group Holdings, Inc. (NYSEMKT:AREN) in another article and shared 180 Degree Capital Corp.'s views on the company. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
Disclosure: None. This article is originally published at Insider Monkey.
