Corsair Capital's Thesis on News Corp: Q3 Letter ~ market folly

Thursday, October 17, 2013

Corsair Capital's Thesis on News Corp: Q3 Letter

Jay Petschek and Steven Major's hedge fund Corsair Capital has released its Q3 letter and in it, they detail the thesis of one of their holdings: News Corp (NWSA).

They see this as a typical undervalued spin-off play as the old News Corp this year has split up into a publishing entity ('new' News Corp) and an entertainment division (21st Century Fox).  Many nvestors held shares of the growth company (Fox), and dumped shares of NWSA.

Corsair's Thesis on News Corp (NWSA)

Corsair writes,

"The misperception of NWSA as a  shrinking newsprint business enabled new investors to purchase several growing video/digital assets (which  contribute approximately 50% of the company’s EBITDA) at a cheap valuation. With solid cash generative businesses, a net-cash rich balance sheet of almost $4.00 per share and a management team focused on creating  shareholder value, NWSA shares offer limited downside and upside of a $25.00 stock price in the next 12  months. Potential catalysts include accretive acquisitions, share buybacks, a growing dividend policy, more  bullish sell-side coverage and a re-rating of the stock."

Corsair also recently disclosed a new position in Perion Network.

Embedded below is Corsair's Q3 letter with their write-up on NWSA:

For more hedge fund letters, we just posted up David Einhorn's Q3 letter as well.

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