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Sally Jones
Sally Jones
Articles (580) 

Third on New Rich List, Cohen Poised for Nexstar’s Major Expansion

May 09, 2013 | About:

It looks like the stars have aligned for Nexstar Broadcasting Group Inc. (NASDAQ:NXST), one of the nation’s top 20 television broadcasting companies in Irving, Texas. Yesterday, the company reported plans for a major expansion that is “expected to result in a total leverage ratio of approximately 3.5 times at year-end 2014,” according to Nexstar’s chairman and CEO Perry A. Sook. The company also reported yesterday a new record for its first quarter 2013 revenue of $112.2 million, an increase of 34.2%. In 2012 the company generated a record net revenue of $379 million, with cash flow of $171 million and adjusted EBITDA of $146 million. Nexstar is also getting the yes vote from one of the richest investors in the U.S., Steven Cohen of SAC Capital Advisors, recently listed as third on the latest “Rich List” by Institutional Investors Alpha. Cohen is reported to have earned $1.4 billion in 2012.

As of May 7, 2013, Cohen, the intuitive, poker-playing hedge fund genius, increased his position with Nexstar Broadcasting Group (NASDAQ:NXST) by a12,851.79%, picking up around 1.5 million shares in the price range $26.73. This trade impacts his portfolio by 0.24%.

Cohen first bought 12,117 shares in the fourth quarter of 2012 at an average cost of $11 per share, for a 147% gain. The current share price is $27.19, up 2% from average.

With his latest trade, it looks like Cohen has positioned himself for a possible windfall, cashing in on Nexstar’s major expansion, after acquiring 18 television stations from Newport Television and others, as well as its latest transaction that will expand the company’s geographic diversity and scale to 91 stations in 48 markets of which 33 are duopoly markets, according to Nexstar’s Sook.

Up 286% over 12 months, Nexstar Broadcasting Group Inc. (NASDAQ:NXST) has a market cap of $786.31 million with a P/E of 4.70 and a P/S of 2.21. Nexstar is a diversified media and broadcasting company that uses traditional media, eMedia, digital and mobile media platforms. Nexstar owns or provide services to 72 broadcast television stations and 43 community portal websites located in 41 markets in 18 states, reaching approximately 13.8 million television households, or approximately 12.1% of all U.S. television households according to Nielsen. The company’s stations are affiliates of ABC, CBS, FOX, NBC, CW and My Network. In addition, Nexstar operates 12 related multicast channels affiliated with My Network or Bounce TV, the nation’s first broadcast network targeting African American audiences.

Here’s a GuruFocus interactive screen that tracks NXST valuations over the last 10 years:


NXST data by GuruFocus.com

According to Nexstar’s chairman and CEO, Perry A. Sook, the company is expanding in a big way. He said, “Reflecting our mid-sized market expertise and focus on free cash flow growth, last month Nexstar and Mission Broadcasting, Inc. entered into a definitive agreement to acquire the stock of the owners of nineteen television stations and seven associated digital sub-channels in ten markets for $270 million in a transaction that is expected to be immediately accretive upon closing. When completed later this year, these stations will add seven more duopolies to our operating base and overall, the transaction will expand our geographic diversity and scale to 91 stations in 48 markets of which 33 are duopoly markets. Financially, the acquired stations will also leverage our overhead and infrastructure and are highly attractive on an economic basis as we have identified $12.5 million in projected synergies. This transaction is expected to generate over $50 million in annual incremental broadcast cash flow and is expected to provide free cash flow accretion in the first year approximately 20% higher than the run rate of the company’s station portfolio prior to the announcement of the transaction. This free cash flow accretion is on top of the significant free cash flow accretion related to our acquisition of 18 television stations from Newport Television and others which were completed in the fourth quarter of 2012 and first quarter of 2013.”

As of April 30, 2013, SAC Capital’s portfolio shows 1,585 stocks at a total value of $20.3 billion, with 429 new stocks, and a quarter-over-quarter turnover of 42%.

Steven Cohen’s top buys, sells and holdings:

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

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GuruFocus has detected 3 Warning Signs with Nexstar Media Group Inc $NXST.
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