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Graham Holdings: Multiple Potential Catalysts To Narrow Sum-Of-The-Parts Discount

Elevator Pitch

Most holding companies with diversified businesses tend to trade at a severe discount to their sum-of-the parts valuation and on paper, Graham Holdings Company (GHC) seems to be no exception. I first came across this idea from a video posted on Wall Street Journal Video on January 31, 2015, where famed fund manager Mario Gabelli named Graham Holdings among his top stock picks. Graham Holdings is differentiated from other 'sum-of-the parts value traps', as management has been actively unlocking the value of the Company with several value-accretive capital allocation initiatives. Although the share price of Graham Holdings has rallied by 21% to record a new 52-week high since its November 2014 announcement to spin off its cable division, Cable One in 2015, it still remains deeply undervalued with a potential upside of 39% based on my sum-of-the-parts valuation. I expect upcoming potential catalysts such as the eventual spin-off… Read More …