Miller Value Partners, an investment management company, released its “Deep Value Select Strategy” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, Strategy returned 4.6% (net of fees) behind the S&P 1500 Value Index’s 9.1% return and the S&P 600 Value Index’s +11.3% returns. The strategy returned 20.13% (net of fees) year to date, well ahead of +14.8% and +6.1% returns for the indexes. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Miller Deep Value Select Strategy highlighted stocks like Gannett Co., Inc. (NYSE:GCI), in the third quarter 2024 investor letter. Gannett Co., Inc. (NYSE:GCI) is a media and marketing solutions company. The one-month return of Gannett Co., Inc. (NYSE:GCI) was -4.75%, and its shares gained 178.87% of their value over the last 52 weeks. On November 25, 2024, Gannett Co., Inc. (NYSE:GCI) stock closed at $5.41 per share with a market capitalization of $797.494 million.
Miller Deep Value Select Strategy stated the following regarding Gannett Co., Inc. (NYSE:GCI) in its Q3 2024 investor letter:
“During the quarter, our two largest positive contributors were Gannett Co., Inc. (NYSE:GCI), whose market share price up 20% and United Natural Foods (UNFI), with a market share price up 31%. Gannett continues to make progress with their long-term transformation to a digital media company. Management expects digital revenues to become more than 50% of company sales over the coming year which would support the company’s return to annual revenue growth. In September, the DOJ presented a very strong case against Google for their Ad Tech business. Gannett’s anti-trust case against Google is very similar to the DOJ case, and we believe it remains overlooked by the marketplace. Gannett is being represented by Kellogg Hansen who won the two largest anti-trust verdicts ($1.2B and $1.3B) and were also successful in defending the appeals of those verdicts. While it is impossible to know with certainty the outcome of Gannet’s legal case, we fnd it interesting that Kellogg Hansen’s only compensation is tied to Gannett having success in winning their case. This is an important indication of alignment to us. In a scenario where Gannett wins a verdict in the neighborhood of the amount they are seeking, it may mean a windfall greater than all the net debt on the balance sheet. Assuming, as we do, that the current share price has not priced in such a development, the result would be a share price below two times normalized Enterprise Value to EBITDA (EV/EBITDA). Compared with The New York Times, which currently trades at greater than nineteen times EV/EBITDA, a valuation at half of that multiple on normalized EBITDA would support an equity market cap more than $4B for Gannett. While there are risks of temporary setbacks with multi-year transformations, the current market valuation framework appears to remain focused on the company’s historical secular growth challenges. The biggest near-term risk would be unexpected weaker trends in print advertising creating greater near-term secular revenue headwinds. A successful transformation, positive anti-trust case verdict, and potential non-core asset sale could lead to significant upside potential overtime. We believe the shares remain signifcantly mispriced at only .3 times revenue and greater than 40% normalized free cash fow yield.”
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Gannett Co., Inc. (NYSE:GCI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Gannett Co., Inc. (NYSE:GCI) at the end of the third quarter which was 26 in the previous quarter. In the third quarter, Gannett Co., Inc.’s (NYSE:GCI) reported adjusted EBITDA of approximately $63 million, grew nearly 6% year-over-year. While we acknowledge the potential of Gannett Co., Inc. (NYSE:GCI) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Gannett Co., Inc. (NYSE:GCI) and shared Miller Value Deep Value Strategy’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.