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Forum List » Guru News and Commentaries Guru News, Stock picks and commentaries  
Einhorn's New Short, DMGT
Posted by: Coeus Capital
(IP Logged)
Date: November 6, 2012 04:36PM
 David Einhorn’s new bearish position on London-based Daily Mail and General Trust (DMGT:LN) was the biggest short taken by any hedge fund against UK company in light of new regulatory rulings. The EU had recently instated a rule forcing investors and hedge funds to disclose net short positions, higher than 0.5% and 0.2% respectively, of any company’s issued shares. The new ruling came into effect Nov. 1. It is interesting to note that Einhorn had a 4.4% short stake in DMGT, the UK’s second-largest selling daily newspaper. However, DMGT’s stock price surged 21% in 2012 alone. Investment strengths: - DMGT is the second largest paper in the UK, with average daily circulation of 1.8 million in September. - Diversified businesses with portfolio of digital properties and online news distribution, including Euromoney, institutional investor and metal bulletin. - DMGT generates steady cash flow from operations of more than GBP300 yearly. - Should have benefited from Olympics in 2012, evidenced by recent share price run. Investment risks: - High PEG ratio at 2.28x and BVPS of -0.02 - Highly leveraged at gross gearing of 19.48x - High composition of intangibles/assets of< 0.5x but less acquisitive over the years - Longer secular downtrend with printed publications - Weaker economy could lead to lower ad revenue Note: This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer to buy or sell any securities.
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