Opinions
Lyle Stein
TorstarCorp (B)
TS.B-T
DON'T BUY
Jul 04, 2014
Stock price when the opinion was issued
You might be interested:
They had tremendous problems. He sold at a lost because he was afraid of what would happen. Paper media has been decimated. They sold off assets and cut their dividend. They have no debt and still pay a dividend. He still has to be very wary of this arena, but does view it as a speculative play.
Print media continues to struggle. This company had a digital division that was attempting to turn things around, but hasn’t. They are expected to lose $.22 on earnings this year, and $.22 next year. It is still facing a struggle with regards to the stock price. He would look elsewhere.
Had owned this at one time. Sold his holdings when he didn't like what was going on in the area. The media area has really, really changed, and this company has gotten killed. They had a lot of money in the bank and paid a nice dividend, and had no debt. Started selling off assets. Just reported a net loss of almost $7 million. They keep on losing money and ad revenues keep on going down. They are trying to transition to the new media, and it is not going well. Still has no debt. Paying a highly diminished dividend. He is very leery on this field.
Prem Watsa owns about 40.1% of the common shares. Do you buy this for capital appreciation, the dividend, or perhaps for the breakup value later on? That is definitely a good signal. It could be a good contrarian pick now. They have no debt, and the dividend is over 6%. The high dividend is a danger signal. This is risky.
Biggest question facing them is “Is the dividend secure?”. Had been a 2 trick pony, and is now down to a 1 trick media pony that you divide into 2. Harlequin is gone now, so they have a lot of cash on the balance sheet. The question is, what are they going to do with that cash. Traditional media is hurting, particularly the newspaper business, which is half their cash flow. They now have to do something to break out. In the meantime, they are paying a high level of dividend out of that cash. If they do something that requires cash, they may cut that dividend. 6.6% dividend yield.