Greg Hywood performs surgery on Fairfax Media’s balance sheet

Greg Hywood performs surgery on Fairfax Media’s balance sheet

In November Fairfax Media sold its specialist agricultural media business in the US for $76m.

Yesterday, Fairfax Media sold out of their 51% stake in the New Zealand based on-line and classifieds site Trade Me for $616m.

In a matter of weeks the Company has raised $690m.

This compares with their net indebtedness of $1.49 billion and 30 June 2011 and $914m at 30 June 2012.

Capitalised at $1.25 billion (2,352m shares on issue X a $0.53 share price), we suspect a number of “value investors” will jump on board as Fairfax Media becomes less financially leveraged.

Montgomery believes Fairfax lost its identifiable competitive advantage to several internet offerings many years ago and we will not be tempted. Having said that, we also believe that a digital transformation is under way and the right people for the job are being mobilised.

As you know we aren’t speculators and our process requires us to see evidence of the turnaround occurring. A demonstrated track record is required if we are going to invest rather than speculate. And as we have pointed out recently the shares are as close to an estimate of intrinsic value as they have ever been in the last decade.

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Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.