Coming into the reporting season, we began to believe that the ‘new media’ space had become rather fully priced and, therefore, vulnerable to disappointment. This situation has moderated to varying degrees in recent weeks. Isentia, a media intelligence company who largely operate via SaaS, delivered an interim result in line with guidance but disappointed with its earnings and cash flow composition. They discovered their true vulnerability to excessive valuation by failing to upgrade earnings to some way appease inflamed expectations. Prior to result the stock was trading on 28x (FY16) and today is priced closer to 22x.

The Outdoor advertising trio of APN Outdoor, oOh! Media and QMS Media have been enjoying an ‘Indian Summer’ of strong outdoor industry growth rates. 20.5% growth in February year to date followed 14% in January and 16.5% in December quarter. These numbers continue to print large and eventually will be hard to cycle as we move through the year. The medium has been rediscovered after a decade of neglect, but there is no getting away from full(ish) market pricing at 19.0x, 16x and 20x respectively. We have intentionally taken a holding in one name, APN Outdoor, as a means of managing this risk to an industry enjoying a technology renaissance.