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Viva la Tele! Luxor Capital Group Bets on Hemisphere Media Group

Christian Leone‘s fund, Luxor Capital Group, recently disclosed that it added shares of Hemisphere Media Group Inc (NASDAQ:HMTV) to its portfolio, increasing its position by around 1.47 million class A shares. A couple of weeks ago, Luxor reported increasing its position in Hemisphere to 4.55 million common shares, representing 37.7% of the common stock. After the last reported transaction, its stake reaches 39.1% of the stock.

Christian Leone

 About the Fund

New York-based Luxor Capital Group manages about $7 billion in assets, with holdings in equity and fixed income investments throughout the world. Within the equity market, more than half its stakes are placed on ETFs. Its picks are usually value-oriented; however, distressed companies also pick its attention quite often.

The hedge fund has been quite active lately. Less than two months ago, it added Searchlight Minerals Corp. (OTCMKTS:SRCH) to its equity portfolio, increasing its stake to 20.9% of the stock. Since the company is currently in its exploration stage, it has been posting substantial losses. Consequently, it stands as living proof of Leone’s interest for troubled companies.

Its recent 13F filing also reveals that the fund acquired at least 15 new positions during this year´s third quarter.  It´s biggest purchase was Cole Real Estate Investments Inc (NYSE:COLE), on which it spent almost $200 million.

During Q3, Luxor also placed very big bets on cellphone carriers: it bought 4.589 million shares of Vodafone Group Plc (ADR) (NASDAQ:VOD), worth more than $171 million, and 3.2 million shares of Verizon Communications Inc. (NYSE:VZ), valued at approximately $162 million.

On the contrary, it sold out major stakes in media companies. Its biggest sale was its News Corp (NASDAQ:NWS) stock, but it also slashed its Tiger Media Inc. shares. In this line, Hemisphere Media Group Inc (NASDAQ:HMTV) could come as a replacement for the aforementioned investments.


Viva la Tele!

Hemisphere Media Group is a pure play U.S. Hispanic TV, cable networks, and content platform. Although its stock valuation seems slightly expensive, given the fact that the company is in a development stage, its expected to triple-digit EPS growth for next year, the high EBITDA margin of approximately 46% and strong EBITDA growth make it worth its price. As John Leonard explains at SeekingAlpha, “HMTV is at the intersection of three secular trends: a rising Hispanic population, increasing Hispanic pay-TV subscription growth and higher advertising rates.” In this context, Luxor´s investment in Hemisphere Media Group Inc (NASDAQ:HMTV) seems quite easy to understand.

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