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Investing 501

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  • A. H. Belo: Valuation Has Increased, But So Have The Opportunities And Risk [View article]

    Thanks for your comments.

    I too live in Dallas and I agree that being hyper local is where newspapers need to focus. I always thought that was a huge advantage in smaller towns where TV stations were not as strong. I work with many DMN photographers and they are all excellent at their job. Also Dallas is a strong city in terms of growth prospects. I just feel that the TV journalism in Dallas is very very strong. They do a very good job of exposing local corruption and other stories. They have high profile personalities that can attract readers attention more easily (Dale Hansen on Ellen DeGeneres for example). I am not saying they cannot compete, but DFW is a more competitive in terms of TV vs. newspaper than some other places in my opinion.

    Now that Decherd is gone, there is hope of real change.

    Marketing services is where they can compete, especially against radio, but it will take a long time for that to impact the bottom line.

    There is debate about who originally said that quote

    http://bit.ly/MpycCQ

    I am long AHC, and hope that they will succeed. But at the same time, there is less "margin of safety" at this valuation vs. the original valuation, unless it turns out their us of cash generates some very attractive returns, which is possible.
    Feb 16 11:09 AM | Likes Like |Link to Comment
  • A H Belo: Value Creation Continues At An Accelerated Pace [View article]
    hfw27, thank you for your comment and question.

    The EBITDA used would include any pension accounting expense. We think simple is better than complicated and that philosophy has served us well over our careers.

    The debate on what to do with unfunded pension liabilities is too complicated to address in this forum. We do not believe it should be added to the enterprise value (or thought of like term debt or lines of credit debt) for a variety of reasons. But we do acknowledge that others do so and that is fine with us too.

    We do not recall ever reading a fairness statement in merger documents that adjust the enterprise value for an over/under funded pension liability. But it does play a roll in a reorganization.
    Oct 15 03:32 PM | 1 Like Like |Link to Comment
  • A.H. Belo: Hidden Value Or Value Trap? [View article]
    Comany announces 33% increase in dividend, but more importantly it is reducing the pension contribution from $21M to $11M. Combined with the announced sale of the property in CA, the thesis continues to play out faster than I expected. All good news.
    May 17 11:15 AM | Likes Like |Link to Comment
  • A.H. Belo: Hidden Value Or Value Trap? [View article]
    Yes, I was suprised it happened this quickly and at full value. They did mention some tax leakage and moving costs.. So probably about $25 million net/net...
    Apr 30 05:08 PM | 1 Like Like |Link to Comment
  • A.H. Belo: Hidden Value Or Value Trap? [View article]
    That is my goal. To help by example. Thank you for your comment
    Apr 8 09:03 AM | Likes Like |Link to Comment
  • A.H. Belo: Hidden Value Or Value Trap? [View article]
    Thanks for the comment Valuable Insights..

    MNI is one of my "mistakes" so far. GCI worked out perfectly (at $10 you got newspapers for free counting the TV stations and online stuff).

    I have to revisit MNI to see what the value of their ownership in all these things are. I didn't do as thorough a job on MNI a few years ago as I did on GCI and I am paying for it now!! LOL

    What I missed was, I have always believed that newspapers in smaller markets had an advantage over the Yahoos of the world, but so far the advertising market has deteriorated more than I thought. I really should look at it and decided what to do with it. I think it is trading for only a couple of times cash flow, but the new building construction and pension is killing them.

    Looking forward to your article.
    Mar 29 01:29 PM | Likes Like |Link to Comment
  • A.H. Belo: Hidden Value Or Value Trap? [View article]
    Thank you again for your input. As I mentioned in the article, I thought that investors should not simply take the $68 million in estimated net proceeds at face value or assume it would happen in the investment time frame most investors are using these days (months at the most). I did suggest it could take up to 30 months to sell some of these properties. I think your post helps validate the assumption that investors need to put some kind of discount on management's guidance on the real estate proceeds and set a realistic time frame of years, not months as when a sale might occur.
    Mar 18 11:21 PM | Likes Like |Link to Comment
  • A.H. Belo: Hidden Value Or Value Trap? [View article]
    BK_H. I do not think that you can make such a generalization. Dual class structures are common in media companies. Off the top of my head I can think of Comcast, Viacom, News Corp., Berkshire Hathaway, Discovery, New York Times, Washington Post and Media General all have dual structures as well. Some of these have done well, others not.

    Management has a lot to do with it. If investors are confident that management is working for them, then the structure is viewed as a positive (Berkshire, Comcast, Viacom, Discovery)... If management seems entrenched and does value destroying actions, then there is most likely a discount (Media General, Comcast-sometimes, New York Times perhaps)..

    Here is a study from Wharton that looks at this issue in detail.

    http://bit.ly/ZDJeoF

    Incentives vs. Control: An Analysis of U.S. Dual-Class
    Companies

    We find that relationship of firm value to cash flow rights is positive and concave and the relationship to voting rights is negative and convex. Identical quadratic relationships are found for the respective ownership variables with sales growth, capital expenditures, and the combination of R&D and advertising. Our evidence is consistent with an entrenchment effect of voting control that leads managers to underinvest and an incentive effect of cash flow ownership that induces managers to pursue more aggressive strategies.
    Mar 18 10:42 AM | Likes Like |Link to Comment
  • A.H. Belo: Hidden Value Or Value Trap? [View article]
    Thank you for your thoughts. I think it always is helpful to get input from someone that is very familiar with real estate.. Here is how they described the Riverside property.. I am net even going to pretend that I know what the rent per square foot should be. Maybe this gives you a bit of infomation on the valuation they are using.. Their investor day presentation has ariel views and some commentary too.


    Now, let's look at the specific properties we're trying to monetize. This is a photograph of the new Press-Enterprise building in Riverside that was completed in 2007. It is a 5-story class A office building with approximately 138,000 net rentable square feet. The Press-Enterprise directly occupies
    approximately 50,000 square feet in the building and a law firm occupies approximately 9,500 square feet.
    The building in an adjacent vacant 7,800 square foot former church that The Press-Enterprise owns, our currently being marketed for sale or for sale leaseback. This is an aerial view of The Press-Enterprise campus in downtown Riverside. You can see the new building and the former church.
    You can also see the vacant former Press-Enterprise building and the adjoining production plant, which are not for sale. The entire campus comprises approximately 10.5 acres.
    The estimated market value of the new building and former church is approximately $30 million.
    Mar 17 12:00 PM | Likes Like |Link to Comment
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