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Dr. Paul Price
Dr. Paul Price
Articles (513)  | Author's Website |

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 (NYSE:MSO) which came public via an Oct. 19, 1999, IPO priced at $18 per share.


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.


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

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Dr. Paul Price


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