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Howard Marks’ Purchase of Dial Global, a Bust

January 04, 2013 | About:
Oaktree Capital’s Howard Marks certainly took on a significant risk when he welcomed Dial Global (DIAL) to the fund’s portfolio in the third quarter of 2012.

Not too long after Oaktree’s $71.3 million purchase, Dial Global announced its decision to voluntarily delist from Nasdaq. The company’s board reached the decision through consideration of several factors including the relatively limited historical trading volume of the company’s common stock, the compliance costs from maintaining its Nasdaq listing, and the applicable laws and rules from the federal government and the exchange itself, among other things.

Dial Global, a radio and TV programming content provider, produces news, sports, talk, music and entertainment programs such as jingles and images.

The company is wrapping up its delisting process since filing a Form 25 to the SEC in the end of November. On Dec. 19, the company deregistered more than 2.6 million of its Class A common stock and more than 8.5 million shares of regular common stock.



What was once a dull company insider trading history turned into a frenzy to distribute the company’s shares among its board members on Dec. 31. (View its Insider activity listing.)

From Dial Global’s 10-Year Financials, it has incurred millions in debt and is unable to cover its interest. Its revenue has been in a steep 39.8 percent decline in the past 10 years. Its free cash flow shortage is through the roof.

The recent events on the stock has shed a huge chunk of its market value within one day, moving from $2 per share down to $0.60.

Marks, who purchased the stock at an average price of $2.84 a share, experienced a 90 percent slump from its average. The new holding made up 2.6 percent of Oaktree’s 48-stock portfolio.

As part of Dial Global’s departure from the Nasdaq, the company urges that if investors are interested in the company, its common stock will be traded on the OTC Pink Sheets.

Besides Marks, two other investors on GuruFocus have traded the stock in the past, including Hotchkis & Wiley and Robert Olstein.

See the rest of Howard Marks’ holdings in his Current Portfolio. Also check out his Undervalued Stocks, Top Growth Companies and High Yield stocks.

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About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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