Today, I'd like to revisit Grupo Prisa (PRIS), a Spanish media stock I recommended in the past and then got out of, citing concerns about Europe's inability to solve its fiscal problems. Getting out proved to be a good idea because the stock lost roughly 75% of its value, after I sold it at $4.40. The decline was apparently due to fear that Spain's debt crisis would affect Prisa's ability to refinance debt and/or secure additional credit. It is heavily indebted, although it has some valuable media assets. I never really believed that the company would be forced into bankruptcy -- its cash flow and market position seemed too solid for banks to pull the plug on it. Nevertheless, the company has coasted along for much of the year, valued near zero, on the theory (presumably) that it was on the edge of bankruptcy. Then, last month, it suddenly went on a run. It has doubled since late August. The renewed interest has some basis. PRIS has made progress in restructuring its debt and has made provision to pay dividends to Class B shareholders.
Here is a link to the announcements:
http://www.prisa.com/en/accionistas/
Whitney Tilson, whose fund has a large position in PRIS, has long maintained that PRIS would rise again.
http://seekingalpha.com/article/639121-grupo-prisas-important-deal
The ultimate point here is that PRIS' assets are worth a lot more than its current price, even after the recent run up. It's still risky but appears undervalued even accounting for the risk.
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