Dark Side of the Street (Edition #62)
Stock Profile of the Week: $GCI, Top Movers, Insider Buying and More!
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Micro Cap Profile of the Week
Gannett Co., Inc. (NYSE: GCI)
Gannett is an interesting company that should definitely investigated further but here is a quick profile of the stock.
GCI is a newspaper company which owns hundreds national/ local papers in the US and the UK (notably USA Today). Investors have left the stock because… well… its a newspaper company… that has struggled like most companies in the industry. The company is transitioning into the digital era but is seeing a decline in their legacy print business.
This stock is interesting because on the surface, it looks well undervalued as it trades at 0.5 EV/Sales and ~5 EV/EBITDA. But the company also harbors $1.4B in debt which creates risk for investors. GCI shows losses on their income statement but has positive cash flow, indicating that the company has minimal reinvestment necessary to sustain their business. As the company has positive cash flow and has been paying down their debt, I believe that this is a company to do more research on.
Biggest Questions to Answer:
How long will it take for the print business to die?
Is any reinvestment needed in the print business?
How quickly can the company pay down their debt?
Links for Further Research:
Recent Seeking Alpha Article: “Gannett Is Misunderstood, Grossly Undervalued, And Back On Track” - By Lawrence Fuller
Recent Insider Buying
Large Micro Cap Purchases
Top News of the Week
“Alibaba Spin-Off IPO In The US As Mainland Returns From Vacation” - By Brendan Ahern of Forbes
“Warner Bros. Discovery Sees Streaming Profits Sooner Than Expected” - By Joe Flint and Will Feuer of WSJ
Top Micro Cap Movers this Week
Top 10 Gainers
Top 10 Losers
Special Situation Watchlist
Activision Blizzard ( ATVI 1.56%↑) - Risk Arbitrage
The spread between the buyout price ($95/share) and ATVI’s current trading price is now ~25%.
News Update:
“Microsoft hires EU-beating lawyer to revive blocked mega-merger” - By James Titcomb of The Telegraph
111, Inc. ( YI 0.00) - Going Private Transaction
The non-binding offer has been upgraded from $3.61 to $3.66/share (see link for SEC filing)
The spread between the offer price and the current stock price is 34%
Albertsons Companies, Inc ( ACI 0.60%↑) - Merger Arbitrage
The spread between the buyout price ($27.25/share) and the current trading price is now ~31%.
News Articles:
No new updates
TravelCenters of America ( TA 0.00) - Risk Arbitrage
The spread between the buyout price ($86/share) and the current trading price is now 0%.
*See links for the situation summary from prior editions
Keep your focus, here’s your song of the week!
See you next week!
- Dark Side of the Street