GVC.TO - Glacier Media

[plato1976]

According a comment on SA, seems the trading publication sector doesn't fetch a good EBITDA in private market:

 

"

Fairfax Media sold US agricultural group (including tradeshows and publications) to Penton for US$79.9M or 5X EBITDA (my own calc based on Fairfax financial statements). Glacier paid roughly $9M for a group of business publications from Rogers publishing in 2011. The multiple was estimated to be below 1X revenue.

"

 

If we can apply 5X EBITDA for this subsector in GVC, it's not a good story. Not really sure if the trading publication business is growing in the long term

 

I took a "dive" into the Glacier.  It went down as soon as a bought (as usual) but it has a great FCF yield and a smart management team.  I think some folks here got in a great price in the $1.20s and  $1.10.  Who would be selling down here?  I was surprised that I was able to buy a good sized position despite it representing over 40% of the daily volume. 

 

Packer

[Packer16]

How did you come up with the EBITDA number as I was not able to find that level of detail in Fairfax's financials? If you look at the multiples of Thomson/Reuters at 12x you can get an idea of the high-end multiple. 

 

Packer

[Mephistopheles]

I have a general question about the industry and this company. Why the emphasis on EBITDA? Why not just focus on FCF?

[crackspread]

I think the core behind this business is dying. print advertising is not the preferred way to advertise anymore.

 

As a company, I like the balance sheet and especially at this price. I still consider it risky, however. The industry is poor, no moat, no safety of margin. That's what value investing is all about. I think those of you like this stock are simply just enthralled with the price and not paying any attention to the business fundamentals.

[argonaut]

Another nugget of info: http://www.huffingtonpost.ca/2013/10/17/glacier-black-press-buy-sell-newspaper_n_4118400.html?utm_hp_ref=canada-british-columbia&ir=Canada+British+Columbia

[Packer16]

I think if Buffett and Fortress are buying these types of assets there is more than first appears.  This and other firms have developed digital properties to capture internet advertising.  Although print advertising has declined internet advertising and other types of revenue will replace it.  What these publications have is an audience, they just need to monetise it.  Maybe it is paywalls, I don't know but they will experiment until they find something that sticks.

 

In examining a similar space a few years ago (radio and TV broadcasters), the market made the same mistake.  The safest way to play this is with firms that have steady CFO over time versus declines in most of the industry.  Glacier is this firm in the newspaper media segment.

 

Packer

[Parsad]

I think if Buffett and Fortress are buying these types of assets there is more than first appears.  This and other firms have developed digital properties to capture internet advertising.  Although print advertising has declined internet advertising and other types of revenue will replace it.  What these publications have is an audience, they just need to monetise it.  Maybe it is paywalls, I don't know but they will experiment until they find something that sticks.

 

In examining a similar space a few years ago (radio and TV broadcasters), the market made the same mistake.  The safest way to play this is with firms that have steady CFO over time versus declines in most of the industry.  Glacier is this firm in the newspaper media segment.

 

Packer

 

I agree with you Packer!  If you are providing very specific content to an industry or market, why would your market deteriorate in totality of print and online viewership? 

 

This forum provides very specific content to a specific target market, and has grown at 30-40%+ annual rates of viewership?  Why would specific trade journals, community newspapers, etc, not continue to grow in their niche markets at least at single or double digit rates when total viewership (online and print) are calculated? 

 

As Marshall McLuhan once said, the medium is the message!  It takes time for content providers to come to terms with the societal impact new medium have on distribution.  Those that provide broad content with few barriers to entry, in a world where the cost of distribution is closer to zero than at any time in history, are susceptible to being wiped out.  Those that provide much more specific content with some barriers, have a much better chance at adapting to the new medium and surviving.  Cheers!

[peter buffet]

Parsad, Did you disclose that your 10% position is Glacier?  Do you also know Torstar?

 

 

 

[phil_Buffett]

i bought some this week. a Little stake.

[tombgrt]

I think if Buffett and Fortress are buying these types of assets there is more than first appears.  This and other firms have developed digital properties to capture internet advertising.  Although print advertising has declined internet advertising and other types of revenue will replace it.  What these publications have is an audience, they just need to monetise it.  Maybe it is paywalls, I don't know but they will experiment until they find something that sticks.

 

In examining a similar space a few years ago (radio and TV broadcasters), the market made the same mistake.  The safest way to play this is with firms that have steady CFO over time versus declines in most of the industry.  Glacier is this firm in the newspaper media segment.

 

Packer

 

Packer, how do you get comfortable with declines in ebitda QoQ? What do you use or what logic do you follow to determine that those temporary declines are not turning into LT trends?

 

Also, have you looked at other companies in the sector that seem to be promising because of the same reason? Or is Glacier far better than any alternative in your view?

 

As always, TIA!

[wknecht]

Report of a decent size insider purchase ($1.38mm): http://www.stockhouse.com/news/business-news/2013/10/24/insider-deals-pacific-safety-products-(v-psp)-sell

 

Not sure if this information is reliable though. I didn't see any SEDAR filing or any thing here: http://www.canadianinsider.com/node/7?menu_tickersearch=gvc

[gfp]

Not sure why there is a delay in the filings showing up on SEDI, but there were definitely two large blocks traded through raymond james.  One yesterday (1.15m shares) and one today (1.256m shares).

 

edit - haha - and the ask is now at 1.45...

 

No filings out yet, but the news releases are based on the TSX insider trade marker:

"The TSX Insider Trade Marker Report provides a security level, daily summary of insider buying and selling activities, one file for the Toronto Stock Exchange and one file for the TSX Venture Exchange. This information is based on a trade related marker provided to TSX by brokers at the time a company insider either buys or sells a security."

[krazeenyc]

I've been buying this almost every day for 2 weeks now. I think packer is right about the similarities to companies like CBS a few years ago. The only difference for me personally, is that as someone who lives in NYC is that I'm not very familiar with the quality of their publications -- I sort of have to take their word for it.  I wonder about the time horizon on this one -- we might have to wait a while to have value realized here - or not.

[Parsad]

I've been buying this almost every day for 2 weeks now. I think packer is right about the similarities to companies like CBS a few years ago. The only difference for me personally, is that as someone who lives in NYC is that I'm not very familiar with the quality of their publications -- I sort of have to take their word for it.  I wonder about the time horizon on this one -- we might have to wait a while to have value realized here - or not.

 

They are mostly trade specific journals or community newspapers.  We get two copies of Business in Vancouver in our office at something like $125/year for each.  It comes once a week, and is very specific to Vancouver business...does a much better job than the local or national newspapers. 

 

I wait anxiously for my community newspapers as well, since I'm a hardcore grocery shopper and go through all of the flyers every week.  I've done that ever since my Dad died when I was 21, and I started buying the family groceries.  I need my flyers each week! 

 

So, there are innate moats to these types of publications that would make competition hard for those entering the market...even with significant amounts of capital.  Thus the reason Black Press and Glacier traded a number of competing community papers two weeks ago...too hard to make a buck with competition...but once you are the only game in town...the economics change!  Cheers!

[fareastwarriors]

holders

[argonaut]

Very informative! thank you for sharing. May I ask what screen this? Eg what service ...also does it show when the purchases are made? And I think there are more investors holding over 30k shares but perhaps they don't show because they are through brokerage houses?

[argonaut]

Ah I just saw bloomberg in the lower right hand corner :)

[krazeenyc]

It definitely does not include everyone that holds over 30k shares. I assume they simply compile all the 13Fs and use that data to show everyone who owns over 30k shares from 13Fs. They may also use Insider ownership filings as well.

[plato1976]

Do we have an estimation how much the growth capex is ?

 

The EBITDA multiple is closer to 4.2x or $54 million (annualized $13.4 million from Q2).  The JV accounting has changed from proportional accounting last year.  The business also includes business information/publishing which is more valuable the community newspapers.  In terms of debt refinancing, Glacier has a coverage ratio of over 8 times implying an A or higher credit rating so the 5% interest is not to bad.  The free cash flow is about $30 million including growth cap ex, so you have a FCF yield of about 27%.  Pretty cheap on both an equity and enterprise basis.

 

Packer

[xtreeq]

Do we have an estimation how much the growth capex is ?

 

The EBITDA multiple is closer to 4.2x or $54 million (annualized $13.4 million from Q2).  The JV accounting has changed from proportional accounting last year.  The business also includes business information/publishing which is more valuable the community newspapers.  In terms of debt refinancing, Glacier has a coverage ratio of over 8 times implying an A or higher credit rating so the 5% interest is not to bad.  The free cash flow is about $30 million including growth cap ex, so you have a FCF yield of about 27%.  Pretty cheap on both an equity and enterprise basis.

 

Packer

 

                                                      2012        2011        2010

Investment capital expenditures  $14,504  $10,703  $4,492

Sustaining capital expenditures  $2,368      $4,783    $3,908

 

[fenris]

Little shout out to Glacier and the board:

http://reminiscencesofastockblogger.com/2013/10/28/a-starter-position-in-glacier-media-gvc-to/

 

"There is a good discussion about Glacier on a Corner of Berkshire and Fairfax board.  There is an explanation of the tax issue, a discussion of management (who apparently are big Buffett followers), a fairly recent link to insider buying (management owns a little more than 30% of outstanding shares) and a link to a recent comment by Tim McElvaine.  For some reason the Corner of Berkshire folks won’t let me join their little group (I’ve tried to register on a few occasions and never get a response or valid login) but I’ll try to get past that and admit its a good research source."

 

I think his blog is a very valuable resource and he tends to come up with very interesting ideas. Would be great to have him on here as well.

[writser]

Yep, same here.

[Parsad]

Little shout out to Glacier and the board:

http://reminiscencesofastockblogger.com/2013/10/28/a-starter-position-in-glacier-media-gvc-to/

 

"There is a good discussion about Glacier on a Corner of Berkshire and Fairfax board.  There is an explanation of the tax issue, a discussion of management (who apparently are big Buffett followers), a fairly recent link to insider buying (management owns a little more than 30% of outstanding shares) and a link to a recent comment by Tim McElvaine.  For some reason the Corner of Berkshire folks won’t let me join their little group (I’ve tried to register on a few occasions and never get a response or valid login) but I’ll try to get past that and admit its a good research source."

 

I think his blog is a very valuable resource and he tends to come up with very interesting ideas. Would be great to have him on here as well.

 

More likely he did not pay the $20 one-time free registration.  I think people skim over the "Terms of Use/Registration" stuff, so he might have missed it. 

 

If someone has registered, but not paid the fee, that's almost certainly the reason a membership doesn't get approved.  And while I would like to approve every membership, I don't think it's fair to approve one without payment, when others have paid to get approved...everyone should be treated the same.  Cheers!

[gary17]

I wonder if anyone has discussed the tax issue with management lately and if people think the current share price already reflects that.  I get a sense that it's one on people's mind but we seem to be overlooking that -  quite easy to phone Jon - he's friendly and willing to discuss anything. 

 

If the 1.3M purchase recently is Jon himself (?) then I guess he is not concerned about the tax issue so that answers that question. 

[Parsad]

I wonder if anyone has discussed the tax issue with management lately and if people think the current share price already reflects that.  I get a sense that it's one on people's mind but we seem to be overlooking that -  quite easy to phone Jon - he's friendly and willing to discuss anything. 

 

If the 1.3M purchase recently is Jon himself (?) then I guess he is not concerned about the tax issue so that answers that question.

 

I'm not a particularly big fan of talking to management.  What answer could he give you that would be legal and put you at ease?!  And if such answer did arrive, how confident would you be in the value of that response, since he works for the company?

 

I didn't call and chat with Brian Moynihan when I wanted to know if BAC was a good investment!  I think many investors skew their perspective and own analysis, by listening to what executives and other investment managers say.  How many people bought SHLD because of what Eddie and Bruce were saying?  What's Eddie's average cost in Sears these says?

 

Do your own work, and forget about everything else.  Cheers!