I noticed something very interesting going on with Tegna (TGNA). So, I’m going to keep this short and sweet. There is a huge amount of short interest on Tegna, with 10.71 Million shares short. With Tegna’s current share price, as of this writing, at $12.86, the short interest is equal to about 6.5% of the company's entire market cap. Their market cap is at about $2.2 Billion.
Now here's what's more interesting. Tegna is fighting back.
Go check out Tegna’s latest investor presentation and earnings call. Since May of 2023, they have bought back 25% of all shares outstanding. That is hugely impressive. This is the exact time when Buffet is the biggest fan of share buybacks as well. Buybacks get the most value for shareholders when the share price has been excessively sold off. Tegna is trading at a PE of 4.5 right now. What an amazing time to buy back stock. Tegna’s goal is to return 40% – 60% of free cash flow to shareholders. Tegna has also authorized $350 million in share buybacks for 2024, $86 million of which were executed in Q1, leaving a remaining $270 million in buybacks planned for the rest of this year, at a market cap of $2.2 Billion, that is a substantial amount. That is 12.2% of all shares outstanding. This means that in the span of two years, Tegna (TGNA) will have bought back about 37.2% of all shares trading on the market. The exact percentage will vary with the share price of course. But this is going to place strong upward pressure on the price of the stock.
Now you have to be wondering, what business is Tegna in? This must be some garbage company for so many short sellers to be after it.
Well, let’s take a look at Tegna’s financial strength.
Net Income starting in 2023 and moving back to 2016.
$474.95M -2023
$629.91M – 2022
$477.00M -2021
$481.83M – 2020
$286.24M -2019
$405.66M -2018
$273.74M -2017
$436.70M – 2016
Cash from operations starting in 2023 and moving back to 2016
$587.25M – 2023
$812.15M – 2022
$501.61M – 2021
$805.14M – 2020
$297.47M – 2019
$527.21M – 2018
$389.43M – 2017
$678.70M – 2016
Same for shareholder equity
$2.705B – 2023
$3.072B – 2022
$2.520B – 2021
$2.058B – 2020
$1.590B – 2019
$1.341B – 2018
$995.04M – 2017
$2.271B – 2016
btw I have a cool ycharts graph showing this but reddit is being uncooperative about me posting it. The insert image button hath vanished.
This is hardly a company that is headed for collapse. Over the last five years, revenue, net income, and cash from operations have been stable. Total liabilities, aka debt, is trending downward, and shareholder equity is logically moving upward.
So what gives? Why do short sellers hate this stock so much? Tegna is a television broadcaster that owns 64 stations in 51 different markets. Notable stations include WUSA in Washington, D.C., KHOU in Houston, KARE in Minneapolis, and KING in Seattle. They also own True Crime Network, Twist, and Quest television channels. This is the entire basis of the short seller’s attack on Tegna. It is no more logical than “TV Stations Bad.” All the more telling, best friend of the hedge funds Jim Cramer came out against Tegna recently.
https://finance.yahoo.com/news/jim-cramer-don-t-buy-141603998.html?.tsrc=rss
Whoever could have predicted that…..
Tegna has been having success with streaming:
Tegna also has streaming agreements with Hulu and YouTube TV.
It might not be sexy, but local news isn’t a thing of the past. People still want to know what’s going on in their communities. The investment thesis here isn’t that Tegna will grow into some media powerhouse. Rather, it is that they are doing fine financially, their business isn’t contracting, and they appear to be trying to squeeze the overly enthusiastic short shellers with massive buybacks. You know the best part? The options market is completely asleep at the wheel here. This morning I bought some stock and TGNA 12/19/2025 17.00 C at $.71. That is a call option that is doesn’t expire until December 19th, 2025 with a strike price of $17 for a total of $71 a contract.
I am very excited about this opportunity. If I had to guess, I would say that Tegna will be planning even more buybacks for 2025.
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