It's worth considering that in investing there is no guardrail...

It's worth considering that in investing there is no guardrail stopping you from falling over the proverbial edge.

Right now, if you want to sell SWM you can… In fact, if you are feeling particularly foolish you could even go short SWM at these prices.

If you have been reading any of the hysterical articles from financially ill-informed journalists you would be certain that it’s a great idea to sell SWM right now… except the reality is that if you have the patience to hold until September 2025 selling SWM now for 19 cents a share will have been one of the silliest things you could possibly do with your capital.

Why I politely term the writers of Crikey as ‘financially ill-informed’ is because when you are writing an article on the financial status of a listed company you generally need to know the difference between equity and debt. In the below article Crikey states the following.

‘Seven shares traded at 26 cents on Monday, down from Friday’s 27 cents and equal to the lowest they have been (outside the pandemic in 2020) since the company was created more than a decade ago with a claimed value of $4.1 billion. Friday’s close valued the company at $419 million. Seven West had net $249 million of debt ($306 million gross) on June 30. So in effect, the market reckons Seven’s assets had a value of $170 million. Using gross debt, the value is around $113 million. That includes the $120 million Seven West spent on the takeover of Prime Media in late 2021 (which investors now do not ascribe any value to).’
https://www.crikey.com.au/2023/11/14/kerry-stokes-seven-media-deal/

When the financially ill-informed Crikey writers say that ‘So in effect, the market reckons Seven’s assets had a value of $170 million. Using gross debt, the value is around $113 million.' They must be struggling to understand the difference between equity and debt. If the listed equity markets believed that SWMs assets had a value of $170m (which they don’t and never have) at the same time that SWM carried $249m of net debt then the shares would not trade at 26 cents a share. Equity ranks below debt in terms of the capital structure hierarchy and in the scenario listed above whereby SWM trades at a market capitalisation of $419m with $249m of net debt, the value that is being ascribed to SWMs assets is actually $668m not $170m as stated by Crikey! ($419m market capitalisation + $249m net debt = $668m enterprise value)

When Crikey or any other publication writes pessimistic nonsense about SWM it is perhaps worth asking the question- Is this writer financially literate and able to tell the difference between debt and equity and if not why would I take their opinion as anything other than that of an ill-informed critic?

When SWM was at 80 cents a share on 10th February 2022 I saw numerous positive media reports on the future of SWM and now that the ad market cycle has turned the tone of media commentary has likewise changed. Once again when the ad market cycle turns upwards so too will the media commentary.

Right now both NEC and SWM shares trade at less than half of their recent highs. By September 2025 SWM shares will have delivered multi-bagger returns from the current extremely cheap price of 19 cents a share.

FYI- for anyone who is actually interested in how the SWM business is performing, this week SWM achieved a National Total TV audience share of 42.8% which is one of its highest on record. I wouldn't bet against Jeff Howard. https://sevenwestmedia.com.au/assets/pdfs/Seven-Network-weekly-audience-report-Week-16-2024.pdf