Omega Advisors leader Leon Cooperman (Trades, Portfolio) disclosed on Wednesday he boosted his New Media Investment Group Inc. (NEWM, Financial) stake by 59.16%.
The guru’s New York-based hedge fund was converted into a family office structure at the end of 2018. In a letter to clients, Cooperman said he decided to make the change because he does not want to spend the rest of his life “chasing the Standard & Poor’s 500 index and generating returns on invested capital.” His investing strategy combines a macro view with fundamental valuations.
According to GuruFocus Real-Time Picks, a Premium feature, Cooperman invested in 1.5 million shares of the New York-based company on July 19. He now holds 4.04 million shares, which represent 2.41% of the equity portfolio. The stock traded for an average price of $9.81.
GuruFocus estimates he has lost 0.87% on the investment since the first quarter of 2014.
The publishing company, which focuses on local media assets like community publications, websites and yellow page directories, has a $611.96 million market cap; its shares were trading around $10.10 on Thursday with a price-earnings ratio of 36.05, a price-book ratio of 0.9 and a price-sales ratio of 0.39.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
New Media Investment Group reported first-quarter results on May 2. It posted a loss of 15 cents per share on $387.6 million in revenue, which grew 13.7% from the prior-year quarter. The company also declared a quarterly dividend of 38 cents per share. Its $30 million acquisition of the publishing arm of Schurz Communications closed on Jan. 31.
GuruFocus rated New Media’s financial strength 5 out of 10. Weighed down by poor interest coverage, the Altman Z-Sore of 1.54 warns the company is at risk of going bankrupt.
The company’s profitability and growth scored a 7 out of 10 rating. Despite having margins and returns that underperform competitors, New Media is supported by a moderate Piotroski F-Score of 6, which indicates operating conditions are stable. It has also recorded a decline in revenue per share over the last three years.
With 6.69% of outstanding shares, Cooperman is by far the company’s largest guru shareholder. Other gurus invested in New Media include Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Chuck Royce (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Joel Greenblatt (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Murray Stahl (Trades, Portfolio).
Portfolio composition
Cooperman’s $1.64 billion equity portfolio, which is composed o f 56 stocks as of the end of the first quarter, is heavily invested in the industrials space, followed by smaller holdings in the energy, technology and health care sectors.
Consumer cyclical stocks make up 7.67% of the portfolio. Other stocks the guru holds in this space include Twin River Worldwide Holdings Inc. (TRWH, Financial), Global Eagle Entertainment Inc. (ENT, Financial), The McClatchy Co. (MNI, Financial), MNC Networks Inc. (AMCX, Financial) and Amazon.com Inc. (AMZN, Financial).
Disclosure: No positions.
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