After a long absence dragging myself through the market decline with clients and enjoying some basic statistics courses at Algonquin College, I finally got around to doing some work on Torstar (TS.B). The first time thorough the process is not easy! But going back at it time after time helps to get things a little more in perspective and memory. At a current $5 share price it looks like a reasonable purchase, and a good investment with its 7% dividend (after a recent cut). I figured the WACC to be about 7.3% (4.3% debt plus 6% premium equity, tax rate 33%) on a 59 equity/41 debt ratio (difficult to assess). Average normalized earnings for 10 years were $177M and after-tax 119M. Average normalized OPM is 11.8%. ROIC was 10.4% (119 over Invested Capital of 1,139M). The portion of EPV for the equity holders was about 980k (EPV 1,650M). Market cap at the moment is 79M shares times $5 or $395M.

   I have had a lot of difficulty with the NAV because of the very high goodwill (557M), pension shortfall and CTVgm writedowns. I'll have to think about it a lot more. But NAV at least equals market cap, I am pretty sure.
   This is just some of my preliminary work, I must admit I'm not sure of myself. But it's fun nevertheless. I am reading the new edition of Security Analysis with all the great essays by Klarman et al to help me along. That's an outstanding volume! (I just finished Buffett's bio Snowball and really enjoyed it.)

   TD Waterhouse downgraded TS.B a week ago (to $4.50) and it was removed from the index a month back. Ownership is almost entirely by five Toronto families, in a sort of trust (an interesting legal history there). The Toronto Star is a relatively small portion of the profit of TS, with its community and free Metro papers doing well. The big money-maker and probably engine of growth is Harlequin books. That's an amazing company with a huge line-up of books (paper and electronic) around the world. They have even started a non-fiction division which will be interesting to watch. I wonder what the covers will look like?

     Torstar reports tomorrow at 6:30am. Not that it matters. I expect that it will take time for the stock price to regain the $20 or so it was for the last number of years.  Bob

Mark,
   I will have to review the annual report to see if they break down any numbers. Harlequin is getting into e-books and PDFs in a big way. I see that they also have non-fiction now, books about and for women.
   Some think that TS may spin off Harlequin, but in terms of a catalyst I think the chances are low. With several families running the firm, however, anything is possible. Some may want out or need money or just not be interested in TS.
   TS owns Workopolis and some other sites, although their record in high-tech is not uniformly successful. And the venture into CTVgm lost them huge money.
    I noticed that a big 400k block of shares were bought yesterday to move the stock up 14%.
Bob