After The Bell With Fitz & Jen: Sector Mixed On Analyst’s Q1 Warning

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By: Mark Fitzgerald and Jennifer Saba

Goldman Sachs waved investors away from the sector calling newspaper stocks “value traps,” in a note issued on Thursday.

Goldman Sachs had a rather bleak forecast for Q1 advertising revenue as companies prepare for their earnings calls later this month. Analyst Peter Appert anticipates that ad revenue will decline about 10%.

Nevertheless, the note didn’t exactly light a fire under the pants of investors as today’s trading on newspaper stocks was light and mixed.

Shares in The New York Times Co. were trading up 57 cents, or 2.93%, to $20.00 on Thursday even though Appert warned of a superficial rally dominated by Harbinger and Firebrand gobbling up the stock.

JEN’S Comment
Even the Fed’s statements yesterday about the softening economy didn’t do much to newspaper stocks today. Nor did the cheerless news that the jobless claims hit the highest level since 2005.

I guess the Street has its fingers crossed and tied that the worst of the news and data points already have rolled in. Beats me! Fitz, what say you? The Dow Jones Industrial average closed on an up note, though barely, rising a fraction of a percentage to $20.20.

FITZ’S Comment
“Buy on the bad news” goes the cliche — but nobody seemed to be doing much of that Thursday. There was one exception to that broken rule, though: the newspaper sector’s favorite punching bag, Journal Register Co. Here’s JRC’s story

Perhaps the least surprising news as trading opened Thursday was the disclosure by Journal Register Co. in a regulatory filing that it had been warned by the Big Board it was in danger of being delisted because it’s been unable to get its stock price above $1 since Feb. 29.

Journal Register said it intended to assure NYSE that it will buck up the stock, and the stock took a modest step in that direction, trading up for the second consecutive day. At Journal Register closed at 53 cents, up 3 cents, or 6%.

FITZ’S Comment
Judging by its trading volumes, investor interest in JRC has drifted down steadily in the past weeks with no real news from the company. Thursday, however, when it had some bad news to announce, its volume spiked. JRC volume on the day was 608,849, more than triple the number of daily share trades in its monthly average.

Goldman Sachs’ Appert Thursday again remained skeptical of the future stock performance of acquisitive communnity newspaper publisher GateHouse Media Inc., citing its heavy debt. But GateHouse closed up on the day at 6.04, a gain of 6 cents, or 1%.

FITZ’S Comments
And GateHouse is finding at least one big buyer.

According to Securities and Exchange Commission (SEC) filings, San Francisco investor Jeffrey G. Edwards and his East Peak Partners LP firm were busy Monday and Tuesday buying up GateHouse stock.

Enough, in fact, that the Edwards stake now exceeds 10%, making it second-biggest holder of GateHouse by far. The biggest stakeholder in GateHouse, of course, is New York City investment firm Fortress Investment Holdings.

Here’s how the Street treated the rest of the newspaper sector on Thursday.

A.H. Belo closed at $11.10, up 2 cents, or 0.18%.

E.W. Scripps closed at $42.90, up 6 cents, or 0.14%.

Gannett Co. Inc. closed at $30.27, down 48 cents, or 1.5%.

Journal Communications Inc. closed at $7.48, up 1 cents, or 0.1%.

Lee Enterprises Inc. closed at $11.18, up 2 cents, or 1.8%.

McClatchy closed at $10.93, down 13 cents, or 1.1%.

Media General Inc. closed at $15.28, down 60 cents, or 3.7%.

Sun-Times Media Group closed at 81 cents, up 4 cents, or 6.5%

Washington Post Company closed at $668, down $17.00, or 2.4%.

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