GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

A Publicly Traded Fiefdom - Martha Stewart Omnimedia

May 08, 2013 | About:
Martha Stewart is many things. She is a former fashion model and also an ex-convict. Currently she is a media giant in publishing, television and domestic product design. She founded Martha Stewart Omnimedia (MSO) which came public via an Oct. 19, 1999, IPO priced at $18 per share.

376990998.jpg

The stock popped to $38 by the end of that first day’s trading. That high point was never to be seen again. 1999’s frothy market environment showed just how crazy investors could get. Pro forma earnings in 1999 were only 24 cents a share. Optimistic buyers of MSO thought things would get better. Instead they have gone steadily down hill.

Martha Stewart Omnimedia lost money in 9 of the 10 years ended in 2012. Revenues have been scarce too. Sales per share dropped to their lowest ever last year. The only saving grace has been MSO’s debt-free balance sheet. Even that has a limit. Cumulative losses totaled more than $111 million from 2008 through 2012.

1140415280.jpg

No matter how poorly the company performs, Stewart made sure she can never be forced out. She awarded herself and family members 100% of the supervoting, class B shares. Martha doesn’t skimp on her own salary and benefits. Even the New York Times penned a critical article on her disrespect for fiduciary duties to shareholders.

A Brand Icon in Need of Some Oversight

MSO is essentially a publicly held personal empire that should be avoided like the plague. Why hang around for the last act if you already know the ending?

See my Value Investing model portfolio here http://marketshadows.com/virtual-portfolios/virtual-portfolio/

Disclosure: No Position

About the author:

Dr. Paul Price
http://www.RealMoneyPro.com
http://www.TalkMarkets.com

Visit Dr. Paul Price's Website


Rating: 3.0/5 (7 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide