YLO, Yellow Media

Three weeks ago it seemed that cutting out of would be a bit like throwing away the baby with the bathwater. At the time it had reached a low at $2.04. Just a few days ago it bettered that low by a few ticks by reaching $1.99 Even then it looked like a 5 wave sequence was complete and that may still be the case, but with this additional low it looks even more credible. Here is the chart then and now;

YLO june 29 2011 ylo july 20 2011

The bounce back to about $3.50 has not (yet) occurred but in the meantime nothing is lost either. The stock now yields 30.39% at its current level of distribution/dividend. The P/E is 4.28. For those that adhere to the tenets of Graham & Dodd with respect to value investing, it does not get much better. After all they explain in “Security Analysis” how the market has a tendency to irrationally under-value certain out of favor stocks and how a savvy person (like you) can benefit. Here are the facts according to Bigcharts;

ylo facts

In the meantime according to mr. M White at Signature Global Advisors there is presently an open  short position of about 85 mln. shares or 15% of the outstanding stock which he has at only 520 mln. (525mln according to the company’s website). The average daily trade volume was about 4.7mln shares so it would take 18 days to wash out the shorts.Then of course there is the matter of the sale of one of their publications ,Auto Trader , for about $745, which for now at least has a good chance of going through. Using his share number of 520 that is $1.43 a share.

According to that same website (ylo.com) the enterprise value is around 5.26bln., debt is around 2.14bln. Revenue is about 1.4bln and revenue from the internet are growing at 38%. The commercial paper rating by DBRS is R-1 low. The way I see it the earlier mentioned target of $3.50 (as a minimum) is plausible, credible and both fundamentally and EW-wise entirely reasonable.