When one looks back on the biggest Wall Street disappointments of 2019 for media industry investors, Comscore Inc. may overshadow even the weakest of radio industry issues.
At the start of 2019, Comscore positioned itself as a worthy potential competitor to the nation’s dominant audience measurement and consumer research company, Nielsen.
While that company has struggled, Comscore has seen its stock value disintegrate since former CEO Bryan Wiener and ex-President Sarah Hofstetter exited March 31 and a big stock sale designed to raise millions in cash — and perhaps millions more — was panned by investors.
The bleeding continued on Tuesday, bringing another distressing all-time low to SCOR despite a big international launch.
At Tuesday’s Closing Bell, SCOR suffered a 3.4% decline from Monday, positioning Comscore with a price of just $5.15 per share.
By comparison, on March 11 SCOR was priced at $22.86, and was just coming off what is now its 52-week high.
With Wall Street calling Comscore stock “overvalued,” and a 1-year target estimate of $17.20 still in place for SCOR, uncertainly abounds as far as just what — if anything — can prevent Comscore from such actions as a restructuring prompted by entry into debtor-in-possession status.
The launch of its VideoMetrix Multi-Platform in Malaysia, providing “a single, unduplicated measure of digital video consumption across smartphone, tablet and desktop devices to give clients a deeper understanding of how, when and where video content is consumed,” couldn’t do it.
With analyst Daniel Newman, founding partner at Futurum Research, noting that Comscore is in “a desperate state,” Didric Cederholm of Lion Point Capital took a gander at key hedge fund action surrounding Comscore to see if its low valuation represents a good buy.
“Let’s take a look at the hedge fund sentiment towards Comscore to find out whether it was one of their high conviction long-term ideas,” he wrote on Tuesday.
The conclusion? “Money managers are in a bullish mood,” he said. But, importantly, SCOR isn’t among the top 30 most popular stocks among hedge funds.
That’s not a positive sign for Comscore.
He writes, “At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the fourth quarter of 2018. On the other hand, there were a total of 2 hedge funds with a bullish position in SCOR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).”
The largest stake in Comscore was held by RGM Capital, which reported holding $83.9 million worth of stock at the end of March. It was followed by Bares Capital Management with a $64.6 million position. Other investors bullish on the company included Lion Point, Royce & Associates and GAMCO Investors.
As industrywide interest jumped, key money managers have jumped into Comscore, Cederholm says. This was led by Millennium Management, managed by Israel Englander. It has $10.8 million invested in Comscore, as of the end of Q2.
“Jeffrey Moskowitz’s Harvey Partners also made a $1.9 million investment in the stock during the quarter,” he adds. “The other funds with brand new SCOR positions are Paul Tudor Jones’s Tudor Investment Corp. and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.”
What was Cederholm’s conclusion?
“Comscore is not the least popular stock in this group but hedge fund interest is still below average,” he said. “This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on.”