Charles Davidson’s Wexford Capital disclosed a 5.86% passive stake in Hemisphere Media Group, Inc. (NASDAQ:HMTV) in a recent filing with the SEC. The 710,641 shares obtained represent a new holding for Wexford, which did not report ownership of Hemisphere shares in its latest 13F filing.
The Greenwich, Connecticut-based Wexford Capital was founded in 1994, and manages several funds and private equity portfolios. Their equity portfolio was valued at $1.09 billion as of September 30, and features a good deal of turnover; they opened 57 positions during the third quarter of 2014, the largest being in Delta Air Lines, Inc. (NYSE:DAL), Magna International Inc. (USA) (NYSE:MGA) and Lear Corporation (NYSE:LEA). On the other hand, they closed their positions in 56 stocks during the same quarter.
Hemisphere Media Group, Inc. (NASDAQ:HMTV) is a $151 million market cap entertainment company which specializes in Spanish-language entertainment properties for U.S citizens. Among Hemisphere’s brands are the cable movie network Cine Latino, with 12 million subscribers across the U.S, Canada, and Latin America; WAPA and its U.S counterpart WAPA America, which provides Puerto Rico-centric news and entertainment, and Pasiones, a telenovella and drama series-focused channel. Hemisphere has experienced strong growth thanks to the rapidly growing Spanish-speaking population in the U.S, which is now estimated to be at 45 million as of 2012, nearly 15% of the total population.
On January 21, Hemisphere Media Group, Inc. (NASDAQ:HMTV) announced a partnership with TLN Telelatino Network, a Canadian Spanish-languahe superstation. The partnership with TLN will result in three of Hemisphere’s channels making their way to Canada to join Cine Latino: WAPA America, Television Dominicana, and Centroamerica TV. Like the U.S, Canada also has a growing base of Spanish-speaking citizens, now standing at 1.6 million, or about 5% of the population.
As Wexford’s filing was back-dated to December 31, the latest deal had no bearing on their fourth quarter buying spree. Instead, Wexford is likely impressed with the company’s previous acquisitions and growth, which included launching three of their stations on Cablevision Systems Corporation (NYSE:CVC)’s Optimum TV in the New York tri-state area back in December. Hemisphere’s stock is up 17% since the start of the fourth quarter, 2014.
In the company’s last earnings report, for the third quarter of fiscal 2014, ending September 30, Hemisphere Media Group, Inc. (NASDAQ:HMTV) detailed rising subscriber bases for all of their entertainment platforms, and revenue that continued to rise alongside them. Revenue for the quarter was up by 21% to $28.8 million from $23.7 million during the same year ago period. Revenue for the first three quarters of fiscal 2014 was likewise strong at $78.8 million, a 31% increase over the $60.1 million earned during the first three quarters of fiscal 2013.
While operating expenses also rose, they did not outpace the growth in revenue, leading to new incomes of $0.7 million during the third quarter of fiscal 2014, and $6.2 million for the first three quarters of fiscal 2014. That was compared to losses of $4 million and $6.9 million during the same periods in 2013. Hemisphere also reported that their station WAPA enjoyed record performance, with full-day ratings up 10%, and prime-time ratings up 12% year-over-year. They maintained their full-year earnings guidance, with adjusted EBITDA expected to be in the range of $49 million to $51 million.
There has been relatively little activity on Hemisphere Media Group, Inc. (NASDAQ:HMTV) among the funds we track on Insider Monkey since its IPO in early 2013. Christian Leone’s Luxor Capital Group has been the largest institutional investor from the beginning, with 3.24 million shares by June 30, 2013. They increased that to 5.13 million shares by early 2014, giving them a large 42.30% stake in the company. They have maintained that position ever since.
Richard Rubin’s Hawkeye Capital was a strong early investor in Hemisphere as well, owning over 2 million shares as of June 30, 2013, making them the second largest institutional investor at the time. They maintained those shares for another quarter before selling nearly all of them in the fourth quarter of 2013, and the remaining handful in early 2014.
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