Horos Asset Management Bullish on Liberated Syndication (LSYN) Amid Podcast Industry Growth

Horos Asset Management, an asset management firm, published its ‘Horos Value Internacional’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 26.3% was recorded by the fund for the Q4 of 2020, outperforming its benchmark index that delivered an 11.9% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Horos Asset Management, in their Q4 2020 Investor Letter, said that they initiated a position in Liberated Syndication Inc. (NYSE: LSYN), and allocated a 2.3% portion of their total equities in the company. Liberated Syndication Inc. is an IT service management company that currently has a $130 million market cap. For the past 3 months, LSYN delivered a decent 35.83% return and settled at $4.80 per share at the closing of February 8th.

Here is what Horos Asset Management has to say about Liberated Syndication Inc. in their Q4 2020 investor letter:

“Liberated Syndication (“LSYN”) is a company with a division that provides hosting and other services for podcasts (Libsyn), as well as other services, such as domain registration and hosting for websites (Pair Networks). Although Pair Networks contributes significantly to the company’s cash flow today, LSYN’s current and future focus is on its Libsyn segment. The podcast industry is experiencing years of strong growth, thanks to the massive adoption of smartphones and the increasing quality of the content offered. Libsyn is one of the leaders in hosting services, with more than 75,000 hosted programs at the end of the third quarter and a combined audience of 130 million monthly active users, showing double-digit annual growth in both figures. The company is therefore well positioned to benefit from this structural growth trend.

At the industry level, it is interesting to note that this is a highly fragmented sector, in which there have been numerous corporate developments in the last two years, led by the recent interest of the major technology players. Especially relevant, in this regard, is the role played by Spotify, which has made several acquisitions and signed multi-million dollar exclusivity deals with top trending podcasts, as is the case of The Joe Rogan Experience.

However, our interest in LSYN is not only based on the good prospects of its business. The changes that have taken place in the corporate leadership may bring a major turnaround in its management and ultimately contribute to our returns as shareholders. Specifically, in October 2019, the company’s Chief Financial Officer resigned in the face of the SEC complaint upon detecting bad accounting and communication practices at FAB Universal, former holding company that owned LSYN. The SEC complaint was also against the CEO, who resigned in August 2020, after reaching a financial settlement in mid-2020.

Apart from the SEC complaint, it was the shareholder CAMAC, with an activist role, which managed to reshuffle the management team, after a long time publicly fighting against the poor compensation practices of these executives and their capital allocation decisions. Following these changes, CAMAC has gained several seats on the Board, the company has hired a highly experienced CFO and is looking for a CEO to help implement the strategic changes approved by LSYN, focused on playing an active role in the consolidation of the sector, as well as updating its podcast advertising service and preparing its up-listing to the NASDAQ—today, LSYN is listed on an OTC market, which reduces the company’s visibility and liquidity, as it is not covered by analysts and is away from the institutional investor’s focus.

Finally, in a recent turn of events, almost at the same time as we invested in the company, LSYN announced that it had filed a lawsuit against several shareholders resulting from the merger of a Chinese company with the former holding company that owned LSYN. After the merger, LSYN’s former management team discovered the accounting fraud committed by this Chinese company, whose managers ended up in jail. Now, the company’s new management team claims that, after studying the case documents in detail, these shareholders fraudulently acquired a stake in LSYN and should be forced to dispose of their shares. If they achieve their goal, the company would subsequently redeem these shares, significantly reducing LSYN’s capital and increasing the stake (and value) for the remaining shareholders. This news undoubtedly pushed the share price up further, with a 50% gain in the closing weeks of the year.

Therefore, this is a company with an attractive growth profile, a very solid balance sheet (with net cash), a strong cash generation capacity and a management team committed to uncover value for its shareholders.”


Last month, we published an article about Steel City Capital’s bullish investment thesis on Liberated Syndication Inc. (NYSE: LSYN). LSYN delivered a 42.57% return in the past 12 months.

Our calculations show that Liberated Syndication Inc. (NYSE: LSYN) does not belong in our list of the 30 most popular stocks among hedge funds.

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Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.