Announcement • Sep 13
Edenbrook Capital Sends Letter to Hemisphere Media On September 12, 2022, On September 12, 2022, Edenbrook Capital announced that after market close on September 8, 2022, Hemisphere Media Group, Inc., issued a press release with, what Edenbrook expressed its view that the title ‘Hemisphere Media Group Stockholders Approve Acquisition by Gato Investments LP, a Portfolio Investment of Searchlight Capital Partners, L.P.’ In addition, its stockholders approved the acquisition of the Company by a subsidiary of Gato Investments LP. Edenbrook expressed that the press released is misleading because the majority of the stockholders of the Company's publicly traded Class A shares voted against the transaction for the Company to be taken private by insiders at a price that it believes significantly undervalues the Company. Edenbrook stated that in the Form 8-K filed by the Company 11,884,980 shares were voted against the merger and these 'No' votes were presumably (and logically) all Class A stockholders because the privately held, super-voting Class B shares are all held by insiders who presumably supported the deal (and because that's how the math works out when you back out the B share count). Per the same document, there were 20,827,861 Class A shares outstanding as of the August 5, 2022, record date. So over 57% of the public Class A stockholders voted against the deal. But that number is even higher, because the Class A share count includes over 1,950,000 shares held by officers, directors, and insiders of the Company. Which means if the Company exclude those insiders who are not disinterested stockholders in the traditional sense, then it seems 63% of public stockholders likely voted against the deal. While it is true that the Company calculation excludes the shares held by insider Searchlight, the largest beneficiary of the Insider Takeover, Edenbrook believes it is also true that all Class B shareholders, not just Searchlight, are interested parties who stand to benefit from the transaction and should have been excluded from the count, and had the Company not included the Class B shareholders in its calculation, the vote tally would have been 63% against the merger. In addition, Edenbrook expressed that this transaction exemplifies terrible corporate governance and an abrogation of fiduciary responsibility by the Board of Directors of the Company. Reported Earnings • Aug 10
Second quarter 2022 earnings released: US$0.098 loss per share (vs US$0.16 loss in 2Q 2021) Second quarter 2022 results: US$0.098 loss per share (up from US$0.16 loss in 2Q 2021). Revenue: US$54.2m (up 7.4% from 2Q 2021). Net loss: US$3.91m (loss narrowed 38% from 2Q 2021). Over the next year, revenue is forecast to grow 5.6%, compared to a 2.4% growth forecast for the industry in the US. Over the last 3 years on average, earnings per share has fallen by 2% per year but the company’s share price has fallen by 13% per year, which means it is performing significantly worse than earnings. Announcement • Jul 29
Hemisphere Media Group, Inc. Provides Preliminary Unaudited Earnings Guidance for the Second Quarter Ended June 30, 2022 Hemisphere Media Group, Inc. provided preliminary unaudited earnings guidance for the second quarter ended June 30, 2022. For the quarter, the company expects net revenues to be between $53.0 million to $55.5 million. Operating loss to be between $3.1 million to $1.0 million. Seeking Alpha • Jul 26
Hemisphere Media: New Competing Bids Made It Even More Interesting Hemisphere Media is being taken out opportunistically by insiders for $7/share.
Two competing bidders appeared with offers at $8/share and $9/share.
Management has engaged with one of the bidders. The market expects negotiations to be successful.
An important update to our previously written [[HMTV]] article from two months ago - see it here. For a quick catch-up - small cap US-Hispanic-focused media company Hemisphere Media is being taken out opportunistically by insiders for $7/share. Activist fund Edenbrook Capital (owns 15% A shares, 7.7% economic interest) opposed the deal saying the management had artificially depressed the share price before the takeover and that HMTV is worth at least $12/share. However, the main risk is that management affiliates appear to be holding just enough voting power to outvote the remaining shareholders in a minority vote. When we wrote the last article, the share price was trading at 5% to the offer price, so the situation seemed interesting and on top of that, you had a low-risk option for a small offer price bump.
At the end of June, HMTV price suddenly jumped up and now trades at 12% above the current offer. This was because the company had released a preliminary proxy, which showed that during the last week of the go-shopping period HMTV received two competing bids:
On June 3 - an undisclosed buyer named ‘company E’ proposed a bid at $9/share.
On June 7 - another bidder ‘company F’ made an offer at $8/share.
Quite conveniently, the go-shop period ended on June 8, which limited HMTV ability to engage with the bidders. HMTV share price reaction seemed quite optimistic given that management could’ve just easily ignored these offers easily and proceeded with their buyout (especially as they had the needed shares to win the minority vote). However, apparently, the market thought that these two higher bids combined with the activist pressure will force management to increase their own bid. By the way, another activist Boyar Asset Management has recently joined Edenbrook Capital saying that management’s offer is ridiculously low:
this offer dramatically undervalues the Company: not only is it ~7% below the value of the stock at the beginning of 2022, but it's also nearly 50% below Hemisphere's 52-week high. This wholly inadequate "takeunder" is hardly in the best interests of long-term investors and is fraught with conflicts of interests. To add insult to injury, much of the past year's price decrease appears to have been attributable to some of the Company's own questionable capital allocation and managerial decisions. It is a travesty that the very people in our opinion who are responsible for the share price decline at HMTV are now the ones set to benefit from this laughably low bid.[...]The proposed takeover price dramatically undervalues Hemisphere, raising fears that Company insiders may be attempting to capitalize on the reduced valuation (for which they themselves could partly be blamed) by taking the Company private at a level they know to be well below its intrinsic value. Such a take-private deal might benefit insiders, who could continue participating in the potential synergies and accelerated growth opportunities of the combined entities, but we believe that public investors are getting a raw deal. Announcement • Jun 26
Hemisphere Media Group, Inc.(NasdaqGM:HMTV) dropped from Russell 2000 Defensive Index Hemisphere Media Group, Inc.(NasdaqGM:HMTV) dropped from Russell 2000 Defensive Index Announcement • Jun 10
Edenbrook Capital Sends Letter to Hemisphere Media Group On June 8, 2022, Edenbrook Capital, LLC sent a letter to Sonia Dulá, Rick Neuman, and John Engelman, the members of the Special Committee of Hemisphere Media Group, Inc.’s Board, expressing Edenbrook's strong belief, in light of financial disclosures in the Company's pre-marketing lender presentation, that the Company's entry into an agreement and plan of merger to have the Company taken private at $7.00 per share in cash significantly undervalues the Company. Edenbrook Capital stated that the letter details and provides support for Edenbrook Capital's view that a deal to take the Company private at anything less than $16.00-23.00 per share would raise serious questions about the process, motivations and conflicts of interest surrounding the proposed transaction. Announcement • May 17
Edenbrook Capital Sends Letter to the Board of Hemisphere Media Groups On May 16, 2022, Edenbrook Capital, LLC sent a letter to Peter Kern, the Chairman of the Board, expressing Edenbrook Capital’s strong belief that Hemisphere Media Group, Inc.’s recent entry into an agreement and plan of merger to have the Company taken private at $7.00 per share in cash significantly undervalues the Company. Edenbrook Capital also stated that the letter details and provides support for its belief that a deal to take the Company private at anything less than $12.00 per share would raise serious questions about the process, motivations and conflicts of interest surrounding the proposed transaction. Price Target Changed • May 11
Price target decreased to US$7.00 Down from US$12.50, the current price target is provided by 1 analyst. New target price is 5.1% above last closing price of US$6.66. Stock is down 46% over the past year. The company posted earnings per share of US$0.28 last year. Valuation Update With 7 Day Price Move • May 10
Investor sentiment improved over the past week After last week's 70% share price gain to US$6.69, the stock trades at a trailing P/E ratio of 24.5x. Average forward P/E is 12x in the Media industry in the US. Total loss to shareholders of 54% over the past three years. Board Change • Apr 27
Less than half of directors are independent Following the recent departure of a director, there are only 4 independent directors on the board. The company's board is composed of: 4 independent directors. 6 non-independent directors. Independent Director Adam Reiss was the last independent director to join the board, commencing their role in 2021. The company's minority of independent directors is a risk according to the Simply Wall St Risk Model. Major Estimate Revision • Mar 15
Consensus forecasts updated The consensus outlook for 2022 has been updated. 2022 expected loss increased from -US$0.48 to -US$0.53 per share. Revenue forecast unchanged at US$224.7m. Media industry in the US expected to see average net income growth of 9.1% next year. Consensus price target down from US$14.50 to US$12.50. Share price fell 4.5% to US$5.05 over the past week. Reported Earnings • Mar 11
Full year 2021 earnings: EPS misses analyst expectations Full year 2021 results: EPS: US$0.28 (up from US$0.031 loss in FY 2020). Revenue: US$195.7m (up 29% from FY 2020). Net income: US$11.1m (up US$12.3m from FY 2020). Profit margin: 5.7% (up from net loss in FY 2020). The move to profitability was driven by higher revenue. Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates by 100%. Over the next year, revenue is forecast to grow 15%, compared to a 5.4% growth forecast for the industry in the US. Over the last 3 years on average, earnings per share has increased by 95% per year but the company’s share price has fallen by 28% per year, which means it is significantly lagging earnings. Price Target Changed • Mar 10
Price target decreased to US$12.50 Down from US$14.50, the current price target is an average from 2 analysts. New target price is 110% above last closing price of US$5.96. Stock is down 57% over the past year. The company is forecast to post earnings per share of US$0.17 next year compared to a net loss per share of US$0.031 last year. Announcement • Mar 01
Hemisphere Media Group, Inc. to Report Q4, 2021 Results on Mar 08, 2022 Hemisphere Media Group, Inc. announced that they will report Q4, 2021 results on Mar 08, 2022 Valuation Update With 7 Day Price Move • Feb 23
Investor sentiment deteriorated over the past week After last week's 16% share price decline to US$5.43, the stock trades at a trailing P/E ratio of 10x. Average forward P/E is 14x in the Media industry in the US. Total loss to shareholders of 61% over the past three years. Valuation Update With 7 Day Price Move • Dec 02
Investor sentiment deteriorated over the past week After last week's 18% share price decline to US$7.00, the stock trades at a trailing P/E ratio of 12.9x. Average forward P/E is 13x in the Media industry in the US. Total loss to shareholders of 47% over the past three years. Valuation Update With 7 Day Price Move • Nov 17
Investor sentiment deteriorated over the past week After last week's 20% share price decline to US$9.01, the stock trades at a trailing P/E ratio of 16.6x. Average forward P/E is 15x in the Media industry in the US. Total loss to shareholders of 33% over the past three years. Reported Earnings • Nov 06
Third quarter 2021 earnings released: US$0.37 loss per share (vs US$0.13 profit in 3Q 2020) The company reported a mediocre third quarter result with weaker earnings and weaker control over costs, although revenues improved. Third quarter 2021 results: Revenue: US$50.8m (up 37% from 3Q 2020). Net loss: US$14.8m (down 379% from profit in 3Q 2020). Over the last 3 years on average, earnings per share has increased by 111% per year but the company’s share price has fallen by 7% per year, which means it is significantly lagging earnings. Reported Earnings • Aug 11
Second quarter 2021 earnings released: US$0.16 loss per share (vs US$0.17 loss in 2Q 2020) The company reported a solid second quarter result with reduced losses, improved revenues and improved control over expenses. Second quarter 2021 results: Revenue: US$50.5m (up 45% from 2Q 2020). Net loss: US$6.29m (loss narrowed 5.9% from 2Q 2020). Over the last 3 years on average, earnings per share has increased by 112% per year but the company’s share price has remained flat, which means it is significantly lagging earnings. Announcement • Jul 25
Hemisphere Media Group Reportedly Explores Sale Hemisphere Media Group, Inc. (NasdaqGM:HMTV) is exploring options that include a potential sale, according to people familiar with the matter. The sale deliberations come amid a wave of dealmaking in the Spanish-language TV industry. Hemisphere’s bigger rival Univision Communications Inc. agreed in April to merge with Grupo Televisa SAB’s media assets in a $4.8 billion deal, amid competitive pressure from Comcast Corp’s Telemundo. Hemisphere is working with advisers on the potential sale, which could attract other companies and private equity firms, the sources said. There is no certainty that any deal will be reached, the sources added, requesting anonymity to discuss the confidential matter. A spokesperson for Hemisphere declined to comment. Executive Departure • Jun 04
Independent Director Andrew Frey has left the company On the 25th of May, Andrew Frey's tenure as Independent Director ended after 4.6 years in the role. We don't have any record of a personal shareholding under Andrew's name. Andrew is the only executive to leave the company over the last 12 months. The current median tenure of the management team is 5.29 years. Reported Earnings • May 06
First quarter 2021 earnings released: EPS US$0.83 (vs US$0.24 loss in 1Q 2020) The company reported a strong first quarter result with improved earnings, revenues and profit margins. First quarter 2021 results: Revenue: US$37.6m (up 16% from 1Q 2020). Net income: US$33.4m (up US$42.8m from 1Q 2020). Profit margin: 89% (up from net loss in 1Q 2020). The move to profitability was primarily driven by lower expenses. Over the last 3 years on average, earnings per share has increased by 93% per year but the company’s share price has only increased by 3% per year, which means it is significantly lagging earnings growth. Announcement • Mar 10
Hemisphere Media Group, Inc., Annual General Meeting, May 25, 2021 Hemisphere Media Group, Inc., Annual General Meeting, May 25, 2021. Analyst Estimate Surprise Post Earnings • Mar 06
Revenue beats expectations Revenue exceeded analyst estimates by 2.6%. Over the next year, revenue is forecast to grow 4.3%, compared to a 91% growth forecast for the Media industry in the US. Reported Earnings • Mar 04
Full year 2020 earnings released: US$0.031 loss per share (vs US$0.086 loss in FY 2019) The company reported a solid full year result with reduced losses, improved revenues and improved control over expenses. Full year 2020 results: Revenue: US$151.2m (up 1.2% from FY 2019). Net loss: US$1.24m (loss narrowed 63% from FY 2019). Over the last 3 years on average, earnings per share has increased by 54% per year but the company’s share price has only increased by 1% per year, which means it is significantly lagging earnings growth. Price Target Changed • Mar 04
Price target raised to US$15.50 Up from US$14.00, the current price target is an average from 2 analysts. The new target price is 30% above the current share price of US$11.92. As of last close, the stock is down 3.2% over the past year. Is New 90 Day High Low • Mar 03
New 90-day high: US$11.85 The company is up 6.0% from its price of US$11.16 on 02 December 2020. The American market is up 8.0% over the last 90 days, indicating the company underperformed over that time. It also underperformed the Media industry, which is up 11% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is US$8.46 per share. Announcement • Feb 26
Hemisphere Media Group, Inc. to Report Q4, 2020 Results on Mar 02, 2021 Hemisphere Media Group, Inc. announced that they will report Q4, 2020 results Pre-Market on Mar 02, 2021 Reported Earnings • Nov 11
Third quarter 2020 earnings released: EPS US$0.13 The company reported a strong third quarter result with improved earnings, revenues and profit margins. Third quarter 2020 results: Revenue: US$37.2m (up 3.7% from 3Q 2019). Net income: US$5.30m (up US$8.47m from 3Q 2019). Profit margin: 14% (up from net loss in 3Q 2019). The move to profitability was primarily driven by lower expenses. Over the last 3 years on average, earnings per share has increased by 12% per year but the company’s share price has remained flat, which means it is significantly lagging earnings. Price Target Changed • Nov 11
Price target raised to US$14.00 Up from US$13.00, the current price target is an average from 2 analysts. The new target price is 27% above the current share price of US$11.00. As of last close, the stock is down 12% over the past year. Announcement • Nov 05
Hemisphere Media Group, Inc. to Report Q3, 2020 Results on Nov 09, 2020 Hemisphere Media Group, Inc. announced that they will report Q3, 2020 results on Nov 09, 2020 Is New 90 Day High Low • Oct 29
New 90-day low: US$7.86 The company is down 11% from its price of US$8.80 on 31 July 2020. The American market is up 2.0% over the last 90 days, indicating the company underperformed over that time. It also underperformed the Media industry, which is down 4.0% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is US$6.93 per share. Announcement • Oct 06
Hemisphere Media Group, Inc. to Report Q4, 2018 Results on Mar 05, 2019 Hemisphere Media Group, Inc. announced that they will report Q4, 2018 results at 8:30 AM, US Eastern Standard Time on Mar 05, 2019 Announcement • Aug 04
Hemisphere Media Group, Inc. to Report Q2, 2020 Results on Aug 10, 2020 Hemisphere Media Group, Inc. announced that they will report Q2, 2020 results at 9:00 AM, Eastern Standard Time on Aug 10, 2020 Announcement • Jul 05
Hemisphere Media Group, Inc.(NasdaqGM:HMTV) dropped from Russell Microcap Growth Index Hemisphere Media Group, Inc.(NasdaqGM:HMTV) dropped from Russell Microcap Growth Index Announcement • Jul 02
Hemisphere Media Group, Inc.(NasdaqGM:HMTV) dropped from Russell 2000 Growth-Defensive Index Hemisphere Media Group, Inc.(NasdaqGM:HMTV) dropped from Russell 2000 Growth-Defensive Index