2. Gray Television, Inc. (NYSE:GTN)
Short % of Shares Outstanding As of August 15: 7.10%
Number of Hedge Fund Holders: 22
Gray Television, Inc. (NYSE:GTN) is a broadcasting company operating in around 180 stations across the US. It is the nation’s largest owner of top-rated local television stations and digital assets serving 113 television markets that collectively reach approximately 36% of US television households.
On September 4, InvestigateTV+, the company’s award-winning news magazine, expanded its clearances for the 2024-2025 season. The program now reaches a wider audience, with the weekday edition available in 46% of the US and the weekend edition in 67%.
Earlier, management reported a 1.6% year-over-year increase in revenue in the second quarter of 2024. This mainly came from political advertising, which was higher than 2020 this time. Core advertising revenue fell 1.5% year-over-year because of the absence of the NCAA final four games, which were broadcast last year but not in 2024.
Q3 projections are also not very high because growth will mostly only come from the Olympics advertising revenue alone, with the company’s 56 NBC affiliates generating approximately $19 million. Under such outlooks, its shares are shorted by 7.10%.
22 hedge fund holders have stakes in the company as of June 30. The largest one is held by Darsana Capital Partners with a position of $21,278,728.
It recently announced a live broadcast of the Harlem Globetrotters game and launched new networks in Ohio and South Carolina. There are comprehensive coverage plans for the 2024 Democratic National Convention.
The company received 8 National Edward R. Murrow awards for excellence in journalism this August, highlighting the company’s commitment to quality journalism and its impact on local communities. making it a top stock for investment.
Miller Value Deep Value Strategy stated the following regarding Gray Television, Inc. (NYSE:GTN) in its Q2 2024 investor letter:
“Our two largest detractors during the quarter were Nabors Industries (NBR) and Gray Television, Inc. (NYSE:GTN), whose share prices were down 17% and 16% respectively during the quarter. We think both company’s share prices are at deep discounts to their long-term fundamental value; we have recently increased both holdings.
Gray Television remained under pressure during Q2, with ongoing marketplace concerns on the company debt leverage. Gray has limited maturities over the next 2 years and recently announced an opportunistic debt repurchase program. After a slow start to political advertising due to weaker than expected primaries, we expect to see a nice ramp in political advertising in the back half of the year. Gray’s strong local TV stations, #1 and/or #2 in 89% of their markets, has the company well positioned to achieve $500-700M in high margin political advertising in 2024. In addition, Gray has been outpacing peers in growing their core business over the past couple of years and still appear to be in the early innings of an improvement cycle. Management has recently retrained their salesforce with a greater focus on expanding their high margin digital market share over the next couple of years. In addition, ATSC 3.0 (industry new IP standard), provides opportunity for Gray to stream more content and capture new high margin digital revenue streams overtime. We see the potential for $2.5B of free cash flow generation over the next 5 years that could allow the company to rapidly de-lever their balance sheet and accrue value to the equity holder. With a greater than 80% earnings and free cash flow yield, and an attractive 6.2% dividend yield, we believe patient investors have potential to be rewarded over the coming years.”
