4. Gannett Co., Inc. (NYSE:GCI)
Omega Advisors’ Stake Value: $10,321,000
Percentage of Omega Advisors’ 13F Portfolio: 0.54%
Number of Hedge Fund Holders: 18
Gain in 2021: 64.98%
Headquartered in Virginia, Gannett Co., Inc. (NYSE:GCI) is a mass media holding company that is the leading U.S. newspaper publisher as measured by total daily circulation. Gannett Co., Inc. (NYSE:GCI) owns the national newspaper, USA Today, and several local newspapers in different states.
Leon Cooperman acquired a position in Gannett Co., Inc. (NYSE:GCI) in the fourth quarter of 2019, buying over 7.5 million shares of the company. He has reduced his stake since acquisition, and holds 1.5 million Gannett Co., Inc. (NYSE:GCI) shares as of Q3 2021, worth $10.3 million, representing 0.54% of his total third quarter investments.
Of the 18 hedge funds that were bullish on Gannett Co., Inc. (NYSE:GCI) in the third quarter of 2021, Ophir Asset Management is the biggest stakeholder of the company, with 7.2 million shares, valued at $48.75 million.
Gannett Co., Inc. (NYSE:GCI) has also participated in the NFT and crypto frenzy that is taking over the market. The company announced on November 22 that it will auction NFTs in collaboration with American contemporary artist Peter Tunney. The highest bidder of the “LIBERTY” NFT will also receive the original painting created exclusively for Gannett Co., Inc. (NYSE:GCI) by Peter Tunney. The auction will be hosted on OpenSea, the first and largest marketplace for NFTs. This is Gannett Co., Inc. (NYSE:GCI)’s second NFT auction, following its inaugural auction in June.
Here is what Miller Value Partners has to say about Gannett Co., Inc. (NYSE:GCI) in its Q3 2021 investor letter:
“During the quarter, our only significant positive contributor was Gannett (GCI), which was up in excess of 20%. Management has an aggressive transformation plan that is starting to gain operational traction. Their content subscribers are beginning to scale and should eventually provide an attractive recurring revenue and cash flow stream that will allow the enterprise to return to growth. Achieving their 10M digital subscriber target should generate close to $1B in high margin annual subscription revenue. Secondly, Gannett is aggressively scaling a Digital Marketing Solutions (“DMS”) and Event/Promotion business. DMS currently serves more than 20K small- to medium- sized businesses, with only a 2% market share of a large market (>$18B); Gannet has a significant upcoming growth opportunity. Management is targeting more than $1B in combined revenue from these two efforts over the next couple of years. It is worth highlighting that similar businesses today in the marketplace are being valued at more than 5x revenue. Success of these new growth initiatives could generate more than $2B revenue at higher than average company margins. Even with the recent price increase, we believe Gannett still has limited success from the transformation reflected in its share price, as it has one of the lowest price-to-sales multiples in the marketplace (currently at .25x). The transformation plan has the potential to unlock significant additional equity value as the business mix shifts, free cash flow generation accelerates (normalized free cash flow yield >50%), and their valuation multiples start to narrow with the significant discount to their public company peers.
We invest in our companies with a long-term perspective. Our process is focused on understanding the fundamentals of the business and long-term fundamental value. We roll up our sleeves and dive deep into the names we hold, regularly speaking with management to better understand the asset base and key drivers of the business model. We see this as an advantage in periods where our companies may see short-term fluctuations in their share price, such as what happened in the third quarter. We are looking for embedded value that has significant realization potential over a time horizon much longer than the market’s somewhat shorter-term view.”
