L1 Capital Remains Optimistic in News Corp. (NWS)

L1 Capital, an independent investment management firm, published its fourth quarter 2020 “L1 Long Short Fund Limited” investor letter – a copy of which can be downloaded here. The Company’s NTA increased 34.4% for the quarter (ASX200AI +13.7%) and 29.5% for the 2020 calendar year (ASX200AI 1.4%). You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

L1 Capital, in their Q4 2020 investor letter, mentioned News Corporation (NASDAQ: NWS) and emphasized their views on the company. News Corporation is a US-based media and information services company that currently has a $14.9 billion market capitalization. Since the beginning of the year, NWS delivered a 35.12% return, impressively extending its 12-month gains to 185.15%. As of March 26, 2021, the stock closed at $24.01 per share.

Here is what L1 Capital has to say about News Corporation in their Q4 2020 investor letter:

“News Corp (long +21%) shares rose after reporting strong first quarter FY21 results with all key divisions materially ahead of market expectations. News Corp held an investor day for the Dow Jones division (including the Wall Street Journal) which further highlighted the robust growth potential in the business with the opportunity to double subscribers over the medium term. The Dow Jones division remains significantly undervalued in our assessment, with an implied stand-alone valuation of ~US$7b if we applied a similar multiple to comparable listed peer, the New York Times. Even with the increase in share price this year, we believe News Corp remains significantly undervalued. On a sum of the parts basis, we believe the media, U.S. real estate and publishing assets (including the above-mentioned Dow Jones division) are currently valued at roughly zero. News Corp management are taking progressive steps to better highlight the underlying value of these assets and simplify the corporate structure, which we expect will continue to unlock value going forward.”

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Our calculations show that News Corporation (NASDAQ: NWS) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, News Corporation was in 11 hedge fund portfolios, compared to 14 funds in the third quarter. NWS delivered a 35.80% return in the past 3 months.