While the TVA Group’s stock is slipping on the stock market, its largest institutional shareholder has just increased its stake by indicating its intention to request the sale or transfer of assets.
Rational Investment Group, a private investment firm in Boston, increased its investment in TVA Group last month to increase its holding in Class B shares above the 10% mark.
A document just filed with regulatory authorities indicates that Rational Investment Group began October with an 11.8% stake in TVA following the completion of purchase transactions made during the month of September.
With 4.6 million TVA Group shares in its portfolio, Rational Investment Group is the organization’s largest shareholder behind the controlling shareholder, which remains Quebecor.
TVA Group’s third largest shareholder is another Boston firm, mutual fund manager Fidelity Investments.
Quebecor (64.9%), Rational Investment Group (11.8%) and Fidelity Investments (8.3%) together hold approximately 85% of TVA Group’s Class B shares, according to our calculations based on information collected by financial data firm Refinitiv.
The destiny of the TVA Group undoubtedly lies with Quebecor, which has almost complete control over the Class A shares.
In its document submitted to stock exchange authorities this month, Rational Investment Group indicates that it holds TVA shares for investment purposes.
On the other hand, in a section of the document where the projects or intentions of the institutional investor must be specified, the sale or transfer of assets belonging to the TVA Group or one of its subsidiaries is mentioned.
This document is signed by Guy Gottfried, founder and managing partner of Rational Investment Group.
Despite several attempts to contact him, it was not possible to speak with him to obtain details on his intentions and the investment thesis of the Rational Investment Group in TVA.
The management of Quebecor and the TVA Group did not respond to our requests for comment. Pierre Karl Péladeau has now been acting as CEO of the TVA Group for more than two years.
The closure of TVA’s share capital by Quebecor is an idea often mentioned by observers. In March, The Press published a report in which this possibility was raised by a Montreal minority shareholder. Portfolio manager Stephen Takacsy, of the firm Gestion Lester, emphasized that closing the capital would notably save millions in public company administration, compliance and governance costs.
Performance under pressure
Affected in particular by a drop in advertising revenue, the financial performance of the TVA Group remains under pressure. Managers announced at the start of the year the elimination of 140 positions among other cost-cutting measures.
The presentation of the most recent financial results two months ago revealed that the net loss for the spring months had more than doubled, to 7.8 million year-on-year.
The drop in profitability affects all sectors of activity (television broadcasting, cinematographic and audiovisual services, magazines, as well as production and distribution).
TVA Group shares hit their lowest level on the Toronto Stock Exchange last Thursday since the summer of 2020.
The stock fell that day to $1.41 in Toronto, the equivalent of a 44% decline since the peak of $2.50 reached in the spring.
The current stock price gives a market value of around sixty million dollars to the TVA Group.