Return of the King Greetings gang,
Longtime readers of this Board will understand the reference I am making when I say Return of the King. (Basically, a while back I said that this Torstar journey was like a scene near the end of The Lord of the Rings movie trilogy).
Again, a tip of the hat to Media for helping to cause a rebound in the shareprice. I must confess, it is that sort of effect that I have been trying to have on the
shareprice with various plans (fruitless) I have mentioned here (a gofundme page, a plan to place an ad in Torstar inviting its readership to participate in a go private
transaction, and others that I have forgotten). Perhaps there are other ways to raise
the profile of Torstar amongst retail investors.
1)
I read an article recently which said that BlackBerry is like
a new company and a growth company at that as opposed to a mature and or
declining company . The same could be said of Torstar. It's going from a newspaper business to a digital media business. Let's take it further and say that it
is a toally new company with lots of growth ahead, and we're
in at the ground floor. The price is definitely near the ground anyway!
2)
I'm going to entertain the thesis that Fairfax doesn't take out Torstar. It doesn't always take out companies (eg BlackBerry). Also, it seems like the takeout moment was a while back. Further, as others have mentioned the dual class structure seems to discourage takeovers. I can't think of any dual class share structure company ever being taken out. There might be a 'keep it in the family' philosophy. There must be some young MBA's at the dinner table who would like to grab the wheel for a while. And why not take the Globe article at face value when it reported that Watsa expressed interest, but nothing materialized? Lastly, there are many restricted share units (RSUs) outstanding. I'm not sure if anyone buying out the company would like to deal with the cost of those RSUs. In any event, if we are to have a business owner mindset, we shouldn't be salivating with the thought of buyouts dancing in our heads.
A buyout would be nice though!
2.5) Never underestimate the power of family to pull through challenges, and never
underestimate the instinct for family leaders to provide for future generations. Assuming everything is 'legit' we shareholders can share in the benefits of such
aligned interests.
3)
As I suggested before, it looks like were in for a good old fashioned waiting game for the company to show that it's making more money. The current bullish climate bodes well for Torstar. Businesses will advertise, and this will lead to more revenues. Ad revenues are a cyclical deal, and it looks like we've gone through the trough. On a side note, Corus has been declining lately because of less tv revenues. Maybe the academic research that print advertising is the best form (most memorable anyway!) of advertising is being heeded, and those ad dollars will be redirected to print advertisers. Sounds good to me. New hare-bared plan: let advertisers know that NOBODY clicks on google ads. NODBODY. Flyers work, Google internet ads, not so much.
4) The story is that Torstar has been suffering because of print ad declines, and that Torstar is transforming itself. We are now at that part of the story that shows how the transformation is taking hold or beginning to take hold. This good news trajectory is guaranteed because of what I call the VerticalScope black box. As far as I see it, the numbers from that part of the business are important, but they are also private. Isn't that true? So, it is pretty easy to say, VScope had another great quarter...with no accountability needed. Ring the till Larry!
5) All the non-cash impairments have been flushed out...or the worst of it is over. So, all of that accounting mumbo jumbo that has been obscuring the positive EPS numbers will soon be out of the way. Also, the dividend cuts will also help to boost the EPS number. We are likely heading to financial results with a 'fat' EPS number.
6) The possibility of nixing the paper edition like La Presse can play out a few ways. On the one hand, it could be a major cost saver. On the other hand, it would indicate that physical newspaper sales and demand are tanking. On yet another hand (three hands!!), I cannot live in a world without a paper newspaper! I really need to start a Star subscription.
7) I did some cutting edge research and found that annual EPS divided by annual overall revenue gives a percentage range from about 1 to 2 percent. Conclusion, Torstar can continue to decline in annual revenues yet be more profitable than EVER before, if it can increase its profit margin (even in tiny ways). So, the layoffs, the moving to digital, the outsourcing of the printing...can have very very material effects.
8) I don't like the share count creeping upwards. It's gradual, but I don't like it one bit.
9) I reinvested my dividend dollars into more shares of Torstar.
10) I have been buying a lot of Lottario tickets. I mean a lot. I will keep you posted on how THAT's going.