Triangle Capital and New Media Investments

We highly suggested a handful stocks for purchase in 2015.  Two of which were Triangle Capital and New Media Investments.  Both of these companies are proving us right as we get first reports of income and dividends for the first quarter.  Let's take a quick look at what we know now and what one might expect for the next few months from these two stocks. 

Triangle Capital is a well run, maybe one of the best run, companies we know.  Late in 2014 the stock sold off down into the upper teens price due to what we consider a small credit concern in the last earnings report.  There was also concern about rising interest rates would eat into their income going into 2015.  Both of these concerns have proved pointless as the credit issue has not popped back up and we now know interest rates are staying put for the foreseeable future. We are on record of saying interest rates are going nowhere through 2016.  Triangle Capital has yet to report earnings for the last quarter and is scheduled to do so in early March, but they have stated the first quarter dividend and added a nice 5 cents to the regular payout.  In all we believe TCAP is a buy right here before the earnings report and the 10% dividend looks safe.  We expect the shares to top $25 before year end and maybe ease up close to $30.  In all a nice annual profit. 

New Media Investments we believe has one of the smartest game plans anywhere.  They are using equity raised from shareholders, not debt from banks as newspaper chains have done in the past, to fold up newspapers into an ever increasing group.  The key here however is NEWM is buying in the sweet spot of the newspaper business, small to medium sized weeklies and dailies.  We have been pushing purchase of this stock for sometime now and we have been proved right. The stock is now up over 10% from our suggested purchase price just two months ago and the that does not include the dividend.  The company just reported earnings this morning and they were excellent showing gains and nice expense control.  They also raised their already nifty dividend to 30 cents per quarter getting them back to over 5%.  The dividend is supported by a solid cash flow.  NEWM is buying newspapers for 3 to 5 times cash flow which would be unheard of in the past regarding newspapers. These newspapers are making 8 to 12 times cash flow so one can see they are immediately adding to NEWM's cash flow.  Such is the dynamics of the newspaper business today.  We spent over 3 decades in the newspaper business and have been pounding the table that small dailies have a monopoly status in the markets they operate and none other than Warren Buffet supports our thoughts as he is buying up these newspapers as well.  Go out and buy NEWM today and you will get a nice dividend and should see above $30 share price by year end.  Might even push $35. 

We have a position in NEWM.