Return of Capital Incoming
I am a big believer of becoming a student of certain stocks. Find a handful of companies and become an expert on them. Update your models quarterly. Listen to the transcripts. Follow all of the competitors. If you study a name for a few years you will have more industry knowledge than most sell side analysts.
I’ve done this with the media industry. I have working models on dozens of media companies. Thousands of pages of notes. I have traveled all over the States visiting management teams and learning the industry. The time commitment to learn the media space was gruesome, but well worth the effort.
One small little media company I have been invested in for the past year reported earnings today. It is one of the most interesting companies in the traditional media space I have come across. There is no sell side research. A tight share structure. Clean balance sheet and they are outperforming their national peers. Language in the earnings call and press release suggests continued return of capital is coming. Q3 earnings were strong and guidance for Q4 continues to remain strong, significantly outperforming their peers. Finally, a small competitor (almost identical on the local media side) has fallen recently and could be a good pair trade going into earnings next week.
Let’s dig in.
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