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The following segment was excerpted from this fund letter.
comScore, Inc. (NASDAQ:SCOR)
Our initial investment in SCOR took place in 2021, following its recapitalization by Charter (CHTR), Cerberus and Liberty Media (Qurate). Our original thesis for our investment was centered on multiple factors including our beliefs that:
- SCOR was a company with uniquely competitive media measurement offerings and proprietary data;
- SCOR’s new investors could help with improved execution, financial performance and overall growth; and
- SCOR traded at a significant discount to its peers.
While SCOR’s business has improved dramatically under new management with 33% EBITDA growth over the last two years, SCOR’s stock has declined precipitously. We believe this is due to poor corporate governance and uncertainty around SCOR’s capital structure. As a result, we have ramped up our activism significantly through the nomination of Matthew F. McLaughlin as a director nominee for consideration at SCOR’s upcoming annual meeting of stockholders.
Matt is a retired advertising technology executive and Naval officer. Most recently, he served as Chief Operating Officer of DoubleVerify Holdings, Inc. (DV), a software platform for digital media measurement and analytics, from 2011 to March 2022. As COO of DoubleVerify, Matt directed its Product, Engineering and Sales Operations activity, including managing over half the company’s employees. Given SCOR’s struggles with, and focus on, improving its digital offerings, we could think of nobody more useful to the SCOR Board and management than Matt. Matt is available and happy to speak with any SCOR stockholder that wishes to speak with him so they can judge for themselves whether he is qualified and should serve on SCOR’s Board.
While we are actively preparing to run a competitive proxy campaign to support his candidacy, we hope SCOR’s Board will realize the complementary skill set that we believe he can bring to help build value for all of SCOR’s stakeholders and that a competitive proxy contest will not be required.
As we look forward to 2024, we see a number of potential value-creating catalysts (in addition to our activism) that could lead to material appreciation in the stock. These potential catalysts include:
- SCOR’s preferred stockholders taking steps to demonstrate an alignment of interests across all stakeholders of the company;
- SCOR demonstrating the ability to consistently generate double-digit EBITDA margins; and
- a return to growth for SCOR’s digital business.
Assuming SCOR can continue to generate mid-teens EBITDA in 2024, then its common stock is trading at just 4.7x enterprise value to EBITDA and 0.75x enterprise value to revenue; we believe this will ultimately prove to be an attractive entry price.
We do not believe that either of these multiples are appropriate for a company with unique data assets that generate positive cash flows. We believe a more appropriate multiple would be in the double-digit range. We firmly believe that improvements in SCOR’s corporate governance combined with improving financial metrics and the demonstration of alignment of all stakeholders can lead to material appreciation in SCOR’s common stock.
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Forward-Looking Statements and Disclaimers This shareholder letter may contain statements of a forward-looking nature relating to future events. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company’s current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release. Please see the Company’s securities filings filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company’s business and other significant factors that could affect the Company’s actual results. Except as otherwise required by Federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The reference and link to any websites have been provided as a convenience, and the information contained on such website is not incorporated by reference into this shareholder letter. 180 Degree Capital Corp. is not responsible for the contents of third-party websites. The information discussed above is solely the opinion of 180 Degree Capital Corp. Any discussion of past performance is not an indication of future results. Investing in financial markets involves a substantial degree of risk. Investors must be able to withstand a total loss of their investment. The information herein is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty is made, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions. |
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