Miller Value Partners, an investment management company, released its “Deep Value Strategy” first-quarter 2024 investor letter. A copy of the letter can be downloaded here. Equity markets continued to perform strongly in early 2024, following a successful 2023. The S&P 500 rose by over 10% in Q1. In the first quarter, Strategy returned 1.78% (net of fees) trailing the S&P 1500 Value Index’s 7.59% return and ahead of the S&P 600 Value Index, which was slightly positive. During the first two months, lower valuation and smaller cap stocks lagged the overall equity market. However, in March they took the lead. The Deep Value Select strategy had a weak performance in January and February, but it outperformed the Value and Small Cap indexes in March. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Miller Value Deep Value Strategy featured stocks like Gray Television, Inc. (NYSE:GTN) in the first quarter 2024 investor letter. Headquartered in Atlanta, Georgia, Gray Television, Inc. (NYSE:GTN) is a television broadcasting company. On May 1, 2024, Gray Television, Inc. (NYSE:GTN) stock closed at $6.00 per share. One-month return of Gray Television, Inc. (NYSE:GTN) was 3.03%, and its shares lost 6.04% of their value over the last 52 weeks. Gray Television, Inc. (NYSE:GTN) has a market capitalization of $643.71 million.
Miller Value Deep Value Strategy stated the following regarding Gray Television, Inc. (NYSE:GTN) in its first quarter 2024 investor letter:
“Our two largest detractors during the quarter were Gray Television, Inc. (NYSE:GTN) and Fossil Group (FOSL), whose market share prices both fell between 28 and 30% during the quarter. Both company’s shares are significantly mispriced in our opinion, and we have recently increased our holdings.
Gray Television has been under pressure due to the slow start to political advertising this year. However, we believe the marketplace is significantly underestimating the company’s industry leading local TV stations, which are the number one- or number two-rated channels in 90% of their markets. Gray’s local newscasts deliver more household viewership in their 113 markets than the top three cable news networks combined, or the “network prime” (NBC, CBS, ABC and Fox) combined. The company has been outpacing peers in growing their core business over the past couple of years and still appear to be in the early innings of an improvement cycle. Management appears focused on further monetizing their strong audience reach by growing sports content and is aiming to double their high margin digital advertising market share over the next couple of years. In addition, ATSC 3.0 (industry new IP standard), provides opportunity for Gray to stream more content and capture new high margin digital revenue streams overtime. Finally, the recently opened Assembly studio looks like a hidden asset that is being overlooked by the marketplace. We see the potential for Gray’s earnings and free cash flow to improve as political advertising reaccelerates later in the year due to the upcoming elections and their core business shows improving growth. While the company has significant debt leverage, there are limited maturities over the next 2 years. With the potential for $2.5B of free cash flow generation over the next 5 years, Gray should be in a greater position to rapidly de-lever and accrue significant value to the equity holder. With a greater than 60% forward earnings and free cash flow yield, Gray’s long-term upside potential may be multiples of the current share price.”
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Gray Television, Inc. (NYSE:GTN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held Gray Television, Inc. (NYSE:GTN) at the end of fourth quarter which was 21 in the previous quarter.
We previously discussed Gray Television, Inc. (NYSE:GTN) in another article, where we shared the list of best dividend stocks with high upside potential. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
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