Why This Private Equity-Style Fund Just Bet $17 Million on Lumen Technologies Stock

Core Insights - Penn Capital Management Company disclosed a new position in Lumen Technologies, acquiring over 2.7 million shares valued at approximately $16.8 million during the third quarter [2][3][7] - Lumen Technologies operates as a facilities-based communications and technology provider, offering a range of services including cloud, fiber infrastructure, and managed security [6][9] - The company's recent financial performance showed mixed results, with revenue and adjusted EBITDA exceeding expectations, but a widening net loss [10][11] Company Overview - Lumen Technologies reported a total revenue of $12.7 billion and a net income of -$1.7 billion for the trailing twelve months [5] - The company's stock price as of the latest market close was $8.09, reflecting a one-year price change of -5.75% [5] - Lumen's focus is on providing scalable connectivity and IT solutions to both business and residential clients [9] Investment Position - Penn Capital's new stake in Lumen represents 1.3% of its 13F reportable assets under management at quarter-end [7] - Despite the significant acquisition, Lumen Technologies remains outside of Penn's top five holdings [7] - The investment aligns with Penn's strategy of targeting undervalued companies undergoing restructuring [10][11] Financial Performance - In the latest quarter, Lumen's free cash flow, excluding special items, increased to $1.7 billion from $1.2 billion a year earlier [10] - The company completed major debt refinancing, reducing annual interest expenses by $135 million [10] - However, Lumen's headline GAAP numbers remain concerning, with a net loss of $621 million in Q3, up from $148 million a year earlier [10]