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Osmium Partners Staunchly Believes in Demand Media Inc (DMD)’s Turnaround

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In a recent filing with the Securities and Exchange Commission, John H. LewisOsmium Partners disclosed a significant increase in its holding of Demand Media Inc (NYSE:DMD). The fund now owns about 1.30 million shares of the company through its affiliated funds, up from 477,900 shares that it held previously. The new stake represents about 6.6% of Demand Media’s outstanding common stock.



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Established in 2002, the San Francisco-based long/short hedge fund Osmium Partners primarily invests in undervalued small companies that show sound balance sheet strength, reasonable growth prospects and present attractive reinvestment opportunities. Osmium currently has about $143 million worth of assets under management and the market value of its equity portfolio stands at $121.08 million. The investment firm holds a concentrated public equity portfolio, with its top ten holdings accounting for more than 80% of its value. The companies heading that portfolio included Rosetta Stone Inc (NYSE:RST), Tucows Inc. (USA) (NASDAQ:TCX), and Spark Networks Inc (NYSEMKT:LOV), all of which we’ll look at shortly.

First though, Demand Media, which had a disastrous first quarter, as its sales shrank by 26% on a year-over-year basis and the company posted a paltry EBIDTA of $0.5 million compared with the expected $4 million. The traffic on its key sites including, and dropped during the quarter, leading to lower ad monetization yields. Both and are in a transformative phase and Demand Media Inc (NYSE:DMD) expects to see better results from them in the future. Over the past six months, Demand Media’s stock has slumped by nearly 10%. Among the funds that we track, the interest in the company has increased over the quarter as 13 firms had invested a total of $15.32 million in the company at the end of March as compared to nine funds with $8.64 million invested at the end of the previous quarter. Steven Boyd‘s Armistice Capital is one of the prominent investors of the company, owning 916,000 shares valued at $5.24 million.

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