Miller Value Partners, an investment management company, released its “Deep Value Strategy” first-quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the Deep Value Strategy was down 3.6% net of fees lagging the overall market and the S&P 1500 Value Index. The underperformance of the strategy in the quarter was due to value and cyclical stocks lagging behind the overall equity market. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Miller Value Deep Value Strategy highlighted stocks like Gannett Co., Inc. (NYSE:GCI) in the first quarter 2023 investor letter. Headquartered in McLean, Virginia, Gannett Co., Inc. (NYSE:GCI) is a media and marketing solutions company. On April 20, 2023, Gannett Co., Inc. (NYSE:GCI) stock closed at $1.8100 per share. One-month return of Gannett Co., Inc. (NYSE:GCI) was -1.09%, and its shares lost 55.85% of their value over the last 52 weeks. Gannett Co., Inc. (NYSE:GCI) has a market capitalization of $263.842 million.
Miller Value Deep Value Strategy made the following comment about Gannett Co., Inc. (NYSE:GCI) in its Q1 2023 investor letter:
“Our two largest detractors during the quarter were Nabors (NBR) and Gannett Co., Inc. (NYSE:GCI), holdings whose share prices were down between 8 and 21% during the quarter. Both company’s shares appear significantly mispriced as they have multiple business segments embedded that are at deep valuation discounts to publicly traded peers or recent market transactions, providing long-term upside potential multiples of their current share price.
Gannett’s transformation plan to transition from an analog to digital media company had some recent setbacks as the company experienced $100M+ of inflationary headwinds over the past year, adversely impacting company profitability. Management has taken quick action steps undertaking an aggressive $220M cost reduction program, looking to remove significant fixed costs from their business to enhance company profitability over the coming year. The long-term value creation of the transformation plan will continue to focus on scaling the company’s Business-to-Business digital marketing services (DMS) platform and Business-to-Consumer platform. The marketplace appears to be overlooking Gannett’s significant local, national, and UK audience reach, 179M monthly unique visitors. By expanding their digital offerings and developing new content partnerships Gannett has the potential to monetize their audience, developing new subscription revenue and cash flow streams. Similar to Nabors we believe the marketplace is underestimating Gannet’s free cash flow generation potential over the next couple of years as free cash flow conversion improves overtime and the company further monetizes non-core real estate assets. Ongoing debt reduction has the potential to unlock significant equity value. Finally, the company has internal businesses being overlooked by the marketplace when viewed versus recent market transactions or publicly traded peers. Gannett, whose current market cap ended the quarter below their normalized EBITDA, appears severely mispriced. As patient value investors we have time on our side and look forward to narrowing of the company’s wide price-to -value gap.”
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Gannett Co., Inc. (NYSE:GCI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Gannett Co., Inc. (NYSE:GCI) at the end of the fourth quarter which was 14 in the previous quarter.
We discussed Gannett Co., Inc. (NYSE:GCI) in another article and shared the list of biggest advertising companies in the world. In addition, please check out our hedge fund investor letters Q1 2023 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.
