By Julie Reynolds
Alden Global Capital, the New York hedge fund behind the gutting of local newspapers nationwide, has increased its investments in the parent of Smith & Wesson firearms and controversial coal company Peabody Energy, a new Securities and Exchange Commission filing shows.
The filing, called a Form13F, lists the publicly traded stocks that Alden has invested in. It reports that Alden controls $193 million worth of such “assets under management.” The document reports investments that Alden held in the last quarter of 2019, ending Dec. 31.
Its investment in Smith & Wesson’s parent company American Outdoor Brands (soon to be a spin-off) increased by 120,000 shares, up 36 percent from the previous quarter. Alden now owns 455,000 shares of the company that are worth $4.2 million (up from $2 million the previous quarter).
Later this year, American Outdoor Brands plans to split into two companies, apparently deciding that America’s gun controversies are hurting its outdoor products line. Investors will be allowed to choose which company to keep their stock in.
Alden’s increased investment last quarter seems to indicate its executives believe there’s good profit to be made from this split.
Digging big coal
Alden again bought Peabody Energy shares after dropping the controversial company last year. In addition to other scandals we’ve reported on, Peabody has been under investigation by the New York Attorney General’s Office for allegedly misleading potential investors about the risks of climate change. (While not admitting guilt, Peabody agreed in a settlement to change the way it describes the risk.)
According to The Guardian, Peabody told the White House Council on Environmental Quality in 2015 that carbon dioxide was “a benign gas that is essential for all life.”
“While the benefits of carbon dioxide are proven, the alleged risks of climate change are contrary to observed data, are based on admitted speculation, and lack adequate scientific basis,” the company stated in a letter to the council.
Alden’s investment in Peabody was a relatively modest one this time around: the hedge fund picked up 204,780 shares, worth $1.8 million.
Fracking the west and the news
Another new energy investment was Alden’s purchase of 411,500 shares, worth $4.62 million, of ProPetro Holding Corp., a Midland, Texas, company that provides fracking services to “leading upstream oil and gas companies.” Its focus is the Permian basin, which consists of “mature, legacy, onshore oil and liquids-rich natural gas reservoirs that span approximately 86,000 square miles in West Texas and New Mexico,” according to ProPetro’s website.
Alden did, of course, also invest in more newspaper chains. It’s currently maneuvering toward a full takeover of Tribune Publishing this summer, and has already bought nearly a third of the company, acquiring 11.5 million shares, worth $151.9 million.
After failing at a similar takeover of the Gannett newspaper chain last year, Alden is still holding on to 4.8 million of that company’s shares, worth $30.4 million. But it dumped the 200,500 shares of stock it owned in Tegna, Gannett’s broadcasting spinoff.
A shell company for cash extraction
What isn’t clear from the 13F filing is whether Alden used monies extracted from its Digital First Media (now renamed MNG Enterprises) newspaper chain to make these new purchases.
Alden did use its newspapers’ earnings to buy Peabody shares in 2017, according to a Peabody prospectus filed with the SEC.
The Peabody shares were acquired by Strategic Investment Opportunities LLC, a shell company Alden set up to divert cash from the MNG newspaper chain to use for its own investments.
The prospectus shows that Strategic Investment Opportunities owned 70,224 shares of Peabody preferred stock and 423,672 shares of common stock in August 2017. Alden also used the shell company to buy 20.6 million shares in Monster.com.
Securities and Exchange Commission filings show that last year, Alden president Heath Freeman used Strategic Investment Opportunities to buy 5.7 million shares, or 9.4 percent of GateHouse newspapers’ parent company, New Media Investment Group Inc. That purchase was valued at around $50 million.
Not listed in the filing was Alden purchase this month of $9.2 million worth of the Lee Enterprises news chain — again, paid for with MNG newspaper funds.
Since creating the money-extracting firm in 2016, Alden has used Strategic Investment Opportunities to invest in unrelated businesses that include the now-bankrupt Fred’s pharmacy and Payless ShoeSource chains.
To date, Alden has extracted at least a half-billion dollars — and possibly much more — from its newspapers to gamble on other investments. Although some of these ventures have completely tanked (Fred’s stock lost more than 90 percent of its value before it was delisted), Alden’s executives still managed to personally profit from these deals.
Meanwhile, Alden continues to tell its newspapers — and the communities they serve — that further belt-tightening is needed. Just this month, Tribune papers gave buyouts to scores of employees, a move that immediately cut its newsrooms by 10 to 17 percent.
Among the departures were reporters Joshua McKerrow and Pat Furgurson, who reported from the bed of a pickup truck in a parking garage after five employees were killed and two injured in the June 2018 mass shooting at the Tribune-owned Annapolis Capital Gazette.
As reporter Rachael Pacella wrote on Twitter: “We shared the experience of coming together as a newsroom after the shooting, but now people who don’t know what it means to #PressOn are chipping away at our family for profit.”