VJ Shil
Long/short equity, value, special situations, growth at reasonable price

New Media Investment Group Offers 100%+ Upside With Downside Protection From Sustainable ~7% Dividend Yield

NEWM Market Cap: $452M (Aug 14, 2014); Current Price: $15.03 (Aug 14, 2014); 2014E Target Price: $30.6

Investment Thesis

New Media Investment Group (NYSE:NEWM), a publisher of local print newspaper and online digital media, is an undervalued and underfollowed small-cap stock that trades at 6.1x LTM pro-forma EBITDA and an annualized dividend yield of 7.2%. At current valuations, we believe investors get a turnaround, stabilizing business with free optionality for the company to generate substantial value through accretive acquisitions, making the case for NEWM's compelling asymmetric risk-reward opportunity. NEWM spun off in Feb 2014 from Newcastle Investment Corporation (NCT), a real-estate investment trust (REIT) managed by Fortress Investment Group (NYSE:FIG), after a post-bankruptcy restructuring...

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