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This Hedge Fund Believes Gannett Co. (GCI) Stock Could Be Worth $20 Over the Next Couple of Years

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Jose Karlo Mari Tottoc
·4 min read
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Miller Value Partners, an investment management firm, published its ‘Deep Value Strategy’ fourth-quarter 2020 Investor Letter – a copy of which can be seen here. A net return of 64.9% was recorded by the fund for the Q4 of 2020 which is twice as much of its S&P 500 benchmark return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Miller Value Partners, in their Q4 2020 Investor Letter, said that Gannett Co., Inc. (NYSE: GCI) has been added in their portfolio during the second half of 2020. Wells Fargo & Company is a media company that currently has a $724.8 million market cap. For the past 3 months, GCI delivered an incredible 205.81% return and settled at $5.26 per share at the closing of February 12th.

Here is what Miller Value Partners has to say about Wells Fargo & Company in their Q4 2020 investor letter:

"Finally, we would like to highlight a recent addition to the strategy, Gannett (GCI). Gannett has a local-to-national media footprint through the combined entity of New Media Investment Group and Gannett, a merger that took place late in 2019. As a combined force, the company is able to accelerate their transformation, offering significant digital marketing solutions to create an end-to-end suite of digital marketing and production solutions for businesses at any stage. Over the next couple of years, their digital marketing revenues could become a significantly larger portion of the business, more than 40% of the overall revenue. The company also has a significant event business that, while impacted in the near-term by COVID-19, has good growth opportunities by expanding across the combined footprint. There is the potential of $300M of synergies through consolidation of facilities, centralizing operations, expansion of technology systems, and selling non-core assets. We see normalized EBITDA in excess of $700M and annual free cash flow that could approach $500M over the next couple of years, greater than the company market capitalization at year-end. Gannett’s CEO has significant incentive to deliver on long-term merger targets and reduce debt to the benefit of shareholders. The CEO recently received a new contract that will award him 2M shares if the share price is greater than $10 by the end of 2023. We believe a successful transformation of Gannett over the next couple of years is worth in excess of $20/share."

Ghost Tree Capital's AUM, Returns and Holdings
Ghost Tree Capital's AUM, Returns and Holdings

everything possible/Shutterstock.com

Last December, we published an article telling that Gannett Co., Inc. (NYSE: GCI) was in 11 hedge fund portfolios. GCI delivered a 56.55% return YTD.

Our calculations show that Gannett Co., Inc. (NYSE: GCI) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

https://youtu.be/OgBhPDmWMtI

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

Disclosure: None. This article is originally published at Insider Monkey.