Date: May 16 2012
It may sound like blowing one's trumpet, but Royal Bank of Scotland media analyst Fraser McLeish has changed his high conviction media call to Fairfax Media, the owners of this newspaper, (ASX: FXJ), priced at 67c and yielding 5.3 per cent.
He argues Fairfax is significantly undervalued, particularly following the strong ASX listing of its majority owned, Trade Me, New Zealand's biggest and most popular auction and classified ads site.
Fairfax also has other strong online assets including domain.com.au, Stayz and RSVP.
The largest single holding in my personal portfolio at 30 per cent is Telstra (ASX: TLS), priced at $3.62 and yielding a fully franked 7.8 per cent. Some may argue this is vastly overweight but for a secure, high franked dividend Telstra has no rival.
Some analysts are recommending traders take a profit.
My answer is watch out for Telstra making a bid for James Packer's 50.5 per cent of Consolidated Media that, in turn, owns 25 per cent of Foxtel.
Telstra already owns 50 per cent of Foxtel. A successful bid for Consolidated would make Telstra a 75 per cent controlling owner, with News Ltd holding the other minority 25 per cent
The ACCC may object but such a move would immediately send Telstra's share price sharply north.
Telstra is no longer the old public servant behemoth. Its management has been completely revitalised. This includes Telstra's efficiency expert Robert Nason who has just been appointed Foxtel chairman, while Telstra's head of marketing, Kate McKenzie, has also joined the Foxtel board.
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