News Corp Updates: High Profile Funds Bet on a Recovery

News Corp’s (NASDAQ:NWS) stock has recovered to some extent after its phenomenal dip around July and August resulting from the hacking scandal which led to shut down of News of The World, as well as broader market fall due to economic woes in U.S. and Europe. Nevertheless based on the events from the last couple of weeks, it appears that the company is still battling with its tarnished image and stock may still remain suppressed. However, some institutional investors feel that News Corp may be a good buying opportunity now and are perhaps placing their bets on the expectation that once the hacking scandal subsides, the stock will recover. News Corp is a diversified media company that competes with other media conglomerates such as Disney (NYSE:DIS), Viacom (NYSE:VIA), Time Warner (NYSE:TWX) and CBS (NYSE:CBS).

Recently, the head of News Corp’s Australian unit stepped down in a major management change. ^[1] The bad press, which has played its part in News Corp’s stock slump, further manifested as it shut down the News of The World, in part because of its involvement in spying on Prince William and a Paris court awarding fine to the company for violating privacy of a known figure. ^{[2] [3]}

Nevertheless, taking advantage of News Corp’s suppressed valuation, several financial institutions including Children’s Investment Fund Management UK LLP, Eton Park Capital Management LP and Paulson & Co. invested heavily in the stock, with combined purchase worth well over $1 billion. ^[4] This reflects their optimism around the stock.

Our price estimate for News Corp stands at $23.66, implying a premium of about 40% to the market price.

See our full analysis for News Corp

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1. News Corp.’s Australia Head Steps Down, The Wall Street Journal, Nov 10 2011 [↩]
2. News Corp paper spied on Prince William: BBC, Hindustan Times, Nov 9 2011 [↩]
3. News Corp. Must Pay $44,000 Over Max Mosley Nazi ‘Orgy’ Story, Court Says, Bloomberg, Nov 8 2011 [↩]
4. TCI, Paulson, Eton Park Purchased News Corp. During Phone-Hacking Scandal, Bloomberg, Nov 15 2011 [↩]