James Milton Marsh - Seeking Alpha 'James Milton Marsh' Tag RSS Syndication from SeekingAlpha.com SeekingAlpha.com http://seekingalpha.com/author/james-milton-marsh The Short Case On Journal Register http://seekingalpha.com/article/18495-the-short-case-on-journal-register?source=feed 18495 recent rally in Journal Register (JRC). The stock was up 13% on October 12th alone, and up 27% in the past two weeks. Previously, the stock had been drifting lower, making new 52-week lows for the past year.
Our bear case for JRC is straightforward:
  • secular trends for the newspaper industry are terrible;
  • the economic cycle is slowing, pinching the profitable classified ads category for newspapers;
  • Journal Register has an even less appealing market profile, with exposure to slow growth Michigan and Northern Ohio (40% of circulation);
  • the company has $750MM in debt, levering it at an industry-leading 6.2x, leaving it little financial flexibility;
  • analyst estimates remain too high, and will likely come down before year end;
  • JRC valuation is expensive at 9x EV/EBITDA;
  • fair value for the JRC shares is $5/share.

So what has investors excited about JRC these days? We did a little sniffing around recently and this is what we heard:

  1. "Michigan isn't getting worse."
  2. "Private Capital Management has sold much of its stake, reducing overhang"
  3. "Merrill upgrade"
  4. "Asset sales are going well"

Let's take a look at these reasons individually, as we think it is hard to reconcile the move in the stock with these items.

]]> Mon, 16 Oct 2006 08:03:29 -0400 James Milton Marsh James Milton Marsh submits: We couldn't help but notice the recent rally in Journal Register (JRC). The stock was up 13% on October 12th alone, and up 27% in the past two weeks. Previously, the stock had been drifting lower, making new 52-week lows for the past year.
Our bear case for JRC is straightforward:
  • secular trends for the newspaper industry are terrible;
  • the economic cycle is slowing, pinching the profitable classified ads category for newspapers;
  • Journal Register has an even less appealing market profile, with exposure to slow growth Michigan and Northern Ohio (40% of circulation);
  • the company has $750MM in debt, levering it at an industry-leading 6.2x, leaving it little financial flexibility;
  • analyst estimates remain too high, and will likely come down before year end;
  • JRC valuation is expensive at 9x EV/EBITDA;
  • fair value for the JRC shares is $5/share.

So what has investors excited about JRC these days? We did a little sniffing around recently and this is what we heard:

  1. "Michigan isn't getting worse."
  2. "Private Capital Management has sold much of its stake, reducing overhang"
  3. "Merrill upgrade"
  4. "Asset sales are going well"

Let's take a look at these reasons individually, as we think it is hard to reconcile the move in the stock with these items.


Complete Story »]]> JRC James Milton Marsh CECO CEO Steps Down, Shares Get Long-Awaited Catalyst http://seekingalpha.com/article/17578-ceco-ceo-steps-down-shares-get-long-awaited-catalyst?source=feed 17578 news of CEO Jack Larsen stepping down. Larson will remain on as Chairman. After listening to the conference call last night we are feeling more comfortable with our long position in the CECO shares.

The action suggests the company is serious about change, which we view as a positive.
Keep in mind the company has been plagued by regulatory and legal problems, as well as slowing enrollment growth. Investors have pounded the shares as the problems emerged with the CECO shares shedding 43% of their value in the past 52 weeks. Change was likely necessary and we got that last night.

]]> Wed, 27 Sep 2006 05:31:53 -0400 James Milton Marsh James Milton Marsh submits: Career Education Corporation (CECO) shares rallied 14% on Tuesday following the news of CEO Jack Larsen stepping down. Larson will remain on as Chairman. After listening to the conference call last night we are feeling more comfortable with our long position in the CECO shares.

The action suggests the company is serious about change, which we view as a positive.
Keep in mind the company has been plagued by regulatory and legal problems, as well as slowing enrollment growth. Investors have pounded the shares as the problems emerged with the CECO shares shedding 43% of their value in the past 52 weeks. Change was likely necessary and we got that last night.


Complete Story »]]> CECO James Milton Marsh Barron's Buries the Lede on Newspaper Stocks http://seekingalpha.com/article/17409-barron-s-buries-the-lede-on-newspaper-stocks?source=feed 17409 Barron's this weekend is the headline "Tribune Mess May Help Newspaper Stocks." I suppose there was similar headline when Knight-Ridder was forced on the block late last year. In the meantime, publishing stocks are down 6.59% YTD while the broader media sector is up 8%.

Newspapers stocks are not going to get bailed out by more chatter of LBOs or assets sales. Investors will continue to focus on deteriorating fundamentals, while trying to reconcile these results with current valuations, and the stocks will move lower. Accordingly, I continue to have a negative view on the newspaper publishers.

]]> Mon, 25 Sep 2006 02:53:04 -0400 James Milton Marsh James Milton Marsh submits: Scrolled across the top of the cover of Barron's this weekend is the headline "Tribune Mess May Help Newspaper Stocks." I suppose there was similar headline when Knight-Ridder was forced on the block late last year. In the meantime, publishing stocks are down 6.59% YTD while the broader media sector is up 8%.

Newspapers stocks are not going to get bailed out by more chatter of LBOs or assets sales. Investors will continue to focus on deteriorating fundamentals, while trying to reconcile these results with current valuations, and the stocks will move lower. Accordingly, I continue to have a negative view on the newspaper publishers.


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